The High Court has criticised HMRC for its inadequate evidence against a company it claimed had not paid enough tax.
The issue arose after HMRC had brought a winding up petition against Southbourne Trading Co Ltd in 2016 for alleged underpayment of tax and VAT liabilities.
The company challenged the figures and the claim was reduced. It paid the remaining amount and the petition was dismissed.
However, in late 2016 the company became concerned about its tax position and corresponded with a VAT officer at HMRC, who stated that her notes showed no new winding-up proceedings were being taken.
In fact, HMRC had delivered a petition to the company’s registered address, which was on the fifth floor of a multi-occupancy building with no general reception. The person serving the petition didn’t find the company’s buzzer, but followed someone into the building.
He found an unmanned reception desk for a business centre and left the petition on the reception counter.
Southbourne’s director said that they didn’t receive it. The company didn’t attend the court hearing and the winding-up order was made.
The High Court has now overturned that decision and rescinded the order. It said that HMRC had not delivered the notice correctly to ensure the company had received it.
More importantly, HMRC had not set out its case properly nor provided acceptable evidence. The court was not satisfied that there was or had been a debt, and was entirely satisfied that if a debt were established, the company would be able to pay it.
HMRC’s evidence was so unsatisfactory that the court had no confidence in its accuracy. There was no justification for allowing the winding-up petition to continue, and it was dismissed. Costs were awarded against HMRC.
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