Key Facts
- •HMRC petitioned to wind up Purity Limited under section 85 of the Finance Act 2022 (FA 22) and the Insolvency Act 1986 (IA 86) on public interest grounds.
- •Purity Limited operated an umbrella business with a scheme HMRC alleged was tax avoidance.
- •Purity Limited sought a stay of proceedings pending a judicial review application.
- •The judicial review challenged HMRC's decision to issue the winding-up petition on several grounds, including procedural irregularities and errors of law.
- •HMRC issued determinations against Purity Limited for £9,083,443.80 for unpaid income tax.
- •Purity Limited also appealed a 'stop notice' issued by HMRC to the First-tier Tribunal (FTT).
Legal Principles
The court has jurisdiction to hear public law defences in section 85 FA 22 proceedings.
Beadle v HMRC [2020] EWCA 562
Section 85 FA 22 petitions are treated similarly to public interest petitions under section 124A IA 86.
Case law and practice relating to section 124A IA 86 petitions
The court must consider whether it is 'just and equitable' to wind up the company (section 85(3) FA 22).
Section 85(3) FA 22
The court has the power to stay proceedings under section 124 IA 86, CPR r.3.1.(2)(f), and section 49(3) Supreme Court Act 1981.
Section 124 IA 86, CPR r.3.1.(2)(f), section 49(3) Supreme Court Act 1981
Outcomes
The application for a stay of proceedings was refused.
The court found that Purity Limited could raise public law defences in the section 85 FA 22 proceedings and that there was no justification for a stay on the alternative grounds.
The court rejected Purity Limited's argument that it could only raise public law defences in the Administrative Court.
The court held that it had jurisdiction to hear all arguments, including public law defences, and that the language of section 85 FA 22 did not restrict the company's ability to raise such defences.