Polypipe Limited v Peter Russell Davidson
[2023] EWHC 1681 (Comm)
Fitton & Co Ltd v Dushyant Kohli
25 April 2023
[2023] EWHC 3594 (KB)
High Court
A buyer sued the seller of a business for understating taxes owed. The judge said an expert is needed to figure out exactly how much tax was underpaid. Instead of one expert for both sides, each side can hire their own, delaying the trial.
Key Facts
- •Claimant (Fitton & Co Ltd) sued Defendant (Dushyant Kohli) for breach of a share purchase agreement.
- •The claim alleges the defendant under-recorded VAT owed to HMRC, diminishing the asset's value.
- •The claimant sought a single joint expert on VAT accounting.
- •The defendant sought to set aside the order permitting expert evidence.
- •The share purchase agreement includes an indemnity clause.
- •HMRC has not yet made a demand for VAT.
Legal Principles
It is the taxpayer's responsibility to correctly declare VAT payable.
Master Davison's judgment
Under-recording of VAT, regardless of legal position between claimant and HMRC, diminishes the asset's value.
Master Davison's judgment
Expert evidence is necessary when assessing a complex accounting matter like VAT under-recording.
Master Davison's judgment
Outcomes
Defendant's application to set aside the order for expert evidence was refused.
Expert evidence is necessary to assess the extent of any VAT under-recording, and the defendant's arguments against it were unconvincing.
The order for a jointly instructed expert was revoked.
Concerns about the defendant's ability to pay for the expert and fairness to the defendant warrant allowing each side to instruct its own expert.
Sequential disclosure of expert evidence was ordered.
Claimant to provide evidence first, then defendant can respond and provide their own evidence if needed.
The trial date was postponed.
The expert evidence process will take time.
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