The Commissioners for His Majesty’s Revenue & Customs v Payroll & Pension Services (PPS Umbrella Company) Ltd

Where a winding-up order is not made, a provisional liquidator is ordinarily entitled to retain company property required for remuneration and expenses. The burden lies on a party seeking an order departing from that position. A departure is not justified merely because the appointment caused prejudice, particularly where there is no suggestion of improper conduct.

The court may determine who ultimately bears the provisional liquidator’s remuneration and expenses. It may make that liability conditional on the outcome of related proceedings or on compensation payable under an undertaking in damages. Costs should not ordinarily be left unresolved for a lengthy and insufficiently related appeal or tribunal process.

HMRC’s winding-up petition against Payroll & Pension Services (PPS Umbrella Company) Ltd had been dismissed in an earlier judgment. This judgment dealt with consequential orders concerning the discharge of joint provisional liquidators, delivery of company assets and information, costs, the treatment of the provisional liquidators’ remuneration and expenses, and permission to appeal.

The director sought further orders requiring delivery of keys, money, documents and assistance. HMRC sought permission to appeal the earlier decision and a stay. The central issues were whether the provisional liquidators should retain property, who should bear their remuneration and expenses, and whether HMRC’s proposed appeals had a real prospect of success.

1. Provisional liquidators’ retention. Rule 7.38(3) of the Insolvency Rules 2016 distinguishes between remuneration and expenses, which must be paid from the company’s property where no winding-up order is made, and costs, in respect of which the court may make a separate order. Under rule 7.38(4), the provisional liquidators’ entitlement to retain property is the default position unless the court otherwise directs. The burden lies on the party seeking departure from that position. No such departure was justified because there was no suggestion of improper conduct.
2. The court therefore refused orders requiring delivery of the company’s premises keys and payment of all company money, subject to expenditure properly incurred. Requests for delivery of documents and for correspondence or assistance were also refused. The documents issue involved factual, legal, privilege and confidentiality questions unsuitable for determination at a consequentials hearing and could be pursued by a separate application.
3. HMRC was ordered to pay the director’s petition costs on the standard basis. An interim payment of £186,000 was ordered on account, subject to assessment of proportionality and reasonableness.
4. The court considered the four possible approaches identified in Titan Petrochemicals Group Ltd v Sino Charm International Ltd, including postponing the issue. It rejected postponement pending a possible FTT appeal because that process might take more than a year and was not sufficiently related to the petition. The provisional liquidators’ remuneration and expenses were instead treated as loss potentially recoverable under the undertaking in damages if HMRC’s appeal concerning that undertaking failed; if the appeal succeeded, HMRC should not bear those sums.
5. Permission to appeal was refused. The court was not satisfied that either proposed ground had a real prospect of success. The court granted only a limited stay pending the Court of Appeal’s determination of whether a stay should continue.

The judgment records that HMRC’s winding-up petition had been dismissed on 19 July 2024. HMRC’s appeal was due to be heard by the Court of Appeal, and a limited stay was granted to allow HMRC to seek continuation of the stay from that court. Permission to appeal was refused by the High Court.