Parkwell Investments Ltd v Wilson & Anor

On an application concerning a provisional liquidator, the winding-up court retains jurisdiction despite an outstanding appeal to the First-tier Tribunal against VAT assessments. The question is whether the appeal has real merit, not merely whether an appeal exists. The petitioner must show that a winding-up order is likely. The company must then demonstrate, with properly particularised evidence, that the petition debt is disputed on substantial grounds. The court must separately decide whether provisional liquidation is appropriate, having regard to risks to assets, records and investigations into management. In VAT fraud cases, the Kittel test requires consideration of whether the trader knew, or should have known that the only reasonable explanation for the transaction was its connection with fraudulent VAT evasion. A public authority enforcing the tax laws will not ordinarily be required to give a cross-undertaking in damages.

HMRC presented a winding-up petition against Parkwell based on substantial VAT assessments. Before the petition was presented, Parkwell had appealed earlier assessments to the First-tier Tribunal. HMRC obtained the appointment of a provisional liquidator without notice.

Parkwell applied to discharge the appointment, dismiss or stay the petition, and require HMRC to give a retrospective undertaking in damages. It argued that the Companies Court lacked jurisdiction, that the assessments were disputed on substantial grounds, and that continued provisional liquidation was disproportionate. The central issues were whether the FTT appeal prevented the Companies Court from assessing the likely outcome of the petition, whether the statutory threshold and discretionary requirements for provisional liquidation were met, and whether HMRC should provide an undertaking.

1. Application dismissed. The appointment of the provisional liquidator, and its terms, were continued pending the effective hearing of the winding-up petition.
2. The existence of an appeal to the FTT did not remove or suspend the Companies Court’s jurisdiction. Under