Injunction Success: HMRC Winding-up Petition Stopped

HMRC have today been forced to consent to the dismissal of a winding-up petition for a tax debt of over £0.5m and to pay substantial costs due to poor conduct by HMRC, after first freezing our client’s funds so they couldn’t pay then next presenting a winding-up petition in spite of promising not to. Our injunction application included restraining HMRC from further advertisement and seeking dismissal of the petition. HMRC accepted the petition was legally untenable and they were defeated and ordered to pay costs.

HMRC’s Abusive Winding-up Conduct

HMRC’s conduct in the petition proceedings was poor; which was reflected by the fact that it conceded the entirety of the application made by our clien. As an organisation, HMRC has:

  • Frozen money belonging to the Company (by way of an account freezing order) which would otherwise have been sufficient to pay the tax due from the Company and then presented a winding up petition based on that unpaid tax in the knowledge that the Company’s money had been frozen on its application.
  • Refused to vary that account freezing order to allow the money in the frozen accounts to be released to pay the tax.
  • Represented in the account freezing process that it would stand over enforcement action until after the investigation into the Company’s accounts had concluded; and then presented an HMRC winding up petition contrary to that representation.
  • Most recently, one of the two bank accounts which HMRC had applied to freeze was unfrozen as HMRC’s investigation into it had concluded without further action being taken.

Injunction to Restrain Advertisement and Seek Petition Dismissal

Our client applied to the Insolvency and Companies Court for an order that:

  • The Respondent, Commissioners for His Majesty’s Revenue and Customs (HMRC) and its servants,employees and agents be restrained from advertising, or taking any further steps in respect of advertisement, a petition to wind up the Applicant.
  • That the HMRC Petition be struck out as an abuse of the proper process of the Court.
  • Such other directions as the court thinks just.
  • HMRC pay the Applicant’s costs on the indemnity basis.

HMRC’s Position on Abusive HMRC Petition

HMRC accepted that the Petition should be dismissed in light of their conduct. HMRC Solicitor’s Office agreed to pay a substantial contribution to our client’s costs of and occasioned by the Petition and the Application.

As an aside, they argued that the Court cannot grant injunctive relief as sought by the Applicant against a Government Department and instead can only grant equivalent declaratory relief, citing sections 17 and 21 of the Crown Proceedings Act 1947 as applied in (Quest v the Secretary of State for Education [2023] EWHC 3578 at [137]). However, it is noted that in JT Development Solutions Limited v Secretary of State for Education [2022] 2 BCLC 135, an injunction was granted against the Secretary of State for Education to restrain the presentation of a petition.

Owed Money by a Company? Here’s How We Can Help

Are you owed £750 or more by a company that seems unable to pay? We can help you take legal action to recover your money or defend an abusive debt recovery petition. Our solicitors and barristers specialise in winding-up petitions, which allow you to force a company into closure if they can’t meet their debts. Winding-up petitions tend to make companies that can pay but won’t pay suddenly pay up along with your legal costs. We Offer:

  • Expert Advice: We’ll guide you through the process of issuing a winding-up petition and represent you in court. See our Client Reviews.
  • Defence for Companies: If your company faces an improper winding-up petition or needs time to pay, we can advise you on defending it and guide you through the court hearing.
  • Fixed Fees: We often offer fixed fees, meaning you’ll agree on a set cost upfront for our services. We can even do case on a no win no fee basis if necessary.

Check Your Insolvency Case ✔

We analyse your winding-up petition prospects. We deliver strategic legal advice at your first meeting. We get optimal legal results. Want a first or second opinion on your case? Click below or call our lawyers in London on ☎ 02071830529

The information on this website is not legal advice; you should always obtain specific advice on the circumstances of your case. Our Winding-up Petition Solicitors & Barristers provide specialist legal advice based on decades of expertise. Click here or call +442071830529 to get in touch. For regulatory reasons we do not take on low value cases nor provide free legal advice, information or guidance and our team cannot answer questions from non-clients.

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