Re Autotech Design Ltd, HMRC v Autotech Design Ltd: ChD 2006

Michael Briggs QC summarised the approach to be adopted by the court at the hearing of for the appointment of an interim liquidator pending the hearing of an insolvency petition brought by the Revenue: ‘Although the formulations of the approach to be adopted by the Court differ slightly, their effect is substantially the same and is as follows:
(1) These are not disputed debt cases. This is because the excise duty, and here the VAT, is due as provided for in the relevant assessment notwithstanding a pending appeal.
(2) Nonetheless the question whether the appeal has a real prospect of success or (which is the same thing) whether the debt created by the assessment is bona fide disputed on substantial grounds, is of central importance to the discretion whether to make a winding up order. In that respect Sir Andrew Morritt in the Arena case in the Court of Appeal said this at para.52:
‘If there is a real doubt as to the propriety of the assessments then the issue should be resolved by the tribunal not only because the tribunal is the forum prescribed by Parliament but also because it is not the function of the Companies Court in the exercise of its winding up jurisdiction to adjudicate in respect of a genuinely disputed debt. By contrast, a company which is unable to pay its debts is not to be permitted to delay its winding up by advancing spurious excuses for non payment of the petitioner’s debt’.
(3) Even if the material before the Companies Court does not lead to an affirmative answer to that question there is still a discretion to adjourn or even to dismiss the petition. Prominent in that analysis will be the question whether the company has had a fair opportunity to understand and to answer Customs’ case and to challenge the propriety of the assessment, and again I read from the judgment of Sir Andrew Morritt in Arena in the Court of Appeal at para.92:
‘In circumstances such as these it is essential that the procedure is fair. I understand that there is no prescribed form of assessment and no complaint was made about the form used in this case. Nevertheless it is important that the Commissioners should specify either in the assessment or a letter accompanying it what irregularity they rely on and the facts said to support the contention that the person assessed caused it. This would enable a person in receipt of such an assessment to challenge its propriety. If no such information is given, and the person assessed merely appeals, then the onus is on him to disprove causation without knowing what he is alleged to have caused. This could be oppressive, the more so as he is required to pay the assessed duty before appealing unless the Commissioners agree or the tribunal orders otherwise’.
Anglo Overseas would have been a case for the exercise of a discretion to dismiss or adjourn the petition rather than to make a winding up order had not Mr. Justice Lewison already concluded that there was a real prospect of success on appeal against the assessment.
(4) The Companies Court will not readily or lightly reject without cross-examination evidence tendered by the company in support of an allegation that it has a real prospect of success on appeal. The procedure for hearing of winding up petitions is not appropriate for the weighing of the relative strength or credibility of competing evidence. Furthermore, in cases such as the present, Customs has the additional burden of proving a serious fraud.
(5) But there may be cases, and Arena was confirmed, after some hesitation, in the Court of Appeal to be just such a case, where the company’s case is so completely at variance with the documents, or internally inconsistent, as to be capable of being branded ‘incredible’ without any form of trial. Alternatively, it may be possible for the Companies Court to see (as it did in Arena) that it will simply be impossible for the company to advance any case on appeal with any real credibility.’


Michael Briggs QC


[2006] EWHC 1596 (Ch)


England and Wales


CitedCommissioners of Customs and Excise v Anglo German Breweries Limited ChD 29-Nov-2002
The respondents appealed against imposition of assessments for the diversion of alcohol products from bonded warehouses without payment of duties. Pretence had been made of deliveries abroad, but the goods were later diverted. The company was . .
CitedThe Commissioners for Customs and Excise, The Arena Corporation Limited v The Arena Corporation Limited / Schroeder ChD 12-Dec-2003
. .
CitedCustoms and Excise v Anglo Overseas Ltd ChD 5-Oct-2004
. .
CitedIn re The Arena Corporation Limited; Commissioners for Customs and Excise v The Arena Corporation Limited; the Arena Corporation Limited v Schroeder CA 25-Mar-2004
Sir Andrew Morritt V-C said that in the context of winding up proceedings the test for whether there is a genuine triable issue in a disputed claim, is whether the debt is bona fide disputed on substantial grounds, which, for practical purposes, is . .
CitedHM Customs and Excise v Jack Baars Wholesale, Baars, and Baars CmpC 16-Jan-2004
. .

Cited by:

CitedRevenue and Customs v SED Essex Ltd ChD 14-Jun-2013
Liquidator confirmed despite VAT challege
The Revenue sought the winding up of the company for non-payment of substantial arrears of VAT. The revenue had declined to allow VAT input claims. The company said that the petition was wrong since the debt was genuinely disputed.
Held: The . .
Lists of cited by and citing cases may be incomplete.

Insolvency, Company

Updated: 18 May 2022; Ref: scu.510893