High Court Decision Explores Appointment of Provisional Liquidators in Tax Enforcement Case

Citation: [2023] EWHC 3308 (Ch)
Judgment on


The High Court decision in The Commissioners for HMRC v Payroll & Pension Services (PPD Umbrella Company) Ltd marks a significant analysis of the principles and challenges in the appointment of provisional liquidators within insolvency proceedings. The court’s judgment, handed down by MR STEVEN GASZTOWICZ KC, sitting as a Deputy High Court Judge, explores the interplay between the duty of HM Revenue and Customs (HMRC) as a public authority enforcing tax liability and the protections afforded to companies facing without notice applications for the appointment of provisional liquidators. This article examines the key issues addressed in the case and the legal principles applied.

Key Facts

The core issue in this case revolves around an application by HMRC for the appointment of provisional liquidators against Payroll & Pension Services (PPS Umbrella Company) Ltd, which was alleged to have underpaid national insurance contributions and other taxes totalling approximately £7.3 million. This application was made without notice to the Company, primarily on the basis that notifying the Company could allow for asset dissipation or document destruction that would undermine the enforcement of the tax debt.

The decision in this case focused on a number of legal principles:

Provisional Liquidation

The court adhered to sections 135 of the Insolvency Act 1986 and took guidance from previous case law such as HMRC v Winnington Networks Ltd and Bartel Networks Ltd [2014] EWHC 1259 (Ch), which outline the stringent considerations necessary before the appointment of provisional liquidators, especially on a without notice basis.

Full and Frank Disclosure

The petitioners are bound by an obligation to provide full and frank disclosure due to the ex parte nature of the application. Errors or inaccurate statements in the initial petition required correction. This reflects the importance of accurate representation in without notice applications as emphasized by legal precedent, including Briggs J in Rochdale Drinks Distributors Ltd [2011] EWCA Civ 1116.

Cross-Undertaking in Damages

A significant part of the judgment considered whether HMRC should be required to provide a cross-undertaking in damages as they applied for a provisional liquidator without notifying the Company. This matter brought into play various authorities such as the Sinaloa Gold plc and Hoffmann-La Roche cases, which tend to exempt public authorities from such undertakings in public law enforcement proceedings. However, the decision in this case diverged from this trend, treating HMRC’s application largely like any other creditor’s application.

Public Duty to Enforce Law

In the requirement for HMRC to provide a full cross-undertaking in damages, MR STEVEN GASZTOWICZ KC distinguished between a public authority’s role in law enforcement and its role as a creditor seeking recovery of a debt. This analysis was influenced by jurisprudence, including Lord Mance’s judgment in Sinaloa Gold plc [2013] 2 AC 28 and David Richards J in Abbey Forwarding.


The court required HMRC to provide an unlimited cross-undertaking in damages before appointing a provisional liquidator, representing a significant protective measure for the Company against potential wrongful or premature enforcement action. This tailored the outcome to the specifics of this case, where HMRC acted more as a creditor than a public law enforcement authority.


The case underscores the court’s careful weighing of public authority functions against the need for fair protection of companies during insolvency procedures. It highlights the balance between HMRC’s duty to enforce tax laws and the rights of a company subject to a potentially damaging without notice application. The decision to require an unlimited cross-undertaking in damages from HMRC reflects a cautious and considered approach, reinforcing the necessity for public authorities to act judiciously when exercising their powers against the backdrop of private rights and corporate solvency. This case serves as a vital precedent for future scenarios where public authorities seek interim remedies against companies without advance notice.

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