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HMRC’s Winding Up Petition Dismissed as an Abuse of Process

April 23 2014

Her Majesty’s Revenue and Customs (“HMRC”) issued a winding up petition against ENTA Technologies Limited based on the non-payment of tax raised in assessments whilst the taxpayer’s appeal against those assessments was pending. This was held to be an abuse of the process of the court.

HMRC v ENTA Technologies Limited

ENTA Technologies made claims for the repayment of input tax, which resulted in a reduced payment and not an overall reclaim. It was reported that HMRC launched an investigation into ENTA’s VAT returns as part of a lengthy process known as ‘Extended Verification’ which began in 2006. As a result, several years later many sets of assessments were raised rejecting the repayment of ENTA’s input tax claims and demanding payment by it of a total sum of in excess of £35 million.

The first set of assessments was based on HMRC’s view that the transactions were connected to tax losses arising from Missing Trader Intra-Community (‘MTIC’) frauds. Further assessments also reflected the view of HMRC that the transactions were connected to MTIC frauds of which ENTA knew, or should have known.  A third set of assessments had been made based on non-MTIC matters and an application had been made to the First Tier Tribunal (“FTT”) for permission to submit the appeals out of time.

Before the application to the FTT, HMRC presented a winding-up petition against ENTA based on the non-payment of assessments in the second and third sets. The FTT granted permission to ENTA to appeal the third set of assessments out of time and in doing so stated that it was not persuaded by HMRC’s argument that the appeals were hopeless.

At the winding up hearing David Donaldson Q.C. sitting as a Deputy High Court Judge determined that the a winding-up hearing was not the place or process to be used to resolve genuine disputes as to the existence of a debt, and that the petition should be dismissed as an abuse of process and/or as a matter of discretion and the advertisement restrained.

Taxpayers facing Winding-up Petitions

Taxpayers should take from this that they should resist HMRC’s attempts to seek the winding up of a company or the bankruptcy of an individual where the matter is based upon assessments that are under appeal and have not been immediately dismissed. Moreover, no creditor should issue a winding up or bankruptcy petition on a disputed debt – it is an abuse of process and will not be tolerated by a court.

Winding Up Petition Legal Advice

If you have received a winding up petition our legal experts are able to provide legal advice and representation. Our team of solicitors and barristers can obtain a court adjournment; CVA’s or successfully challenge the validity of the winding up petition to ensure that the petition is dismissed.

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The articles published on this website, current at the date of posting, are for reference purposes only and do not constitute legal advice and should not be relied upon as such. Specific legal advice about your specific circumstances should always be sought separately before taking any action.

Call us on ☎ 02071830529 or email us on for more information about the specialist insolvency legal services we provide. Our team of London lawyers are based in Middle Temple adjacent to the Companies Court. We are committed to providing professional and specialist legal advice and are leading experts in cases involving winding-up petitions.