The company purportedly purchased and sold mobile phones. In 2006, HMRC denied claims for input tax because the transactions for which it was sought were attributable to fraud. The input tax dispute was worth £2.7 million. In 2014, the First-tier Tribunal (FTT) dismissed the company’s appeal on the basis of evidence.
Neither the liquidator nor the sole director were parties to the FTT proceedings. However, the court held that it would be an abuse of process and manifestly unjust to require the liquidator to relitigate the issues which had already been determined by the FTT as:
(a) the sole director had had every opportunity before the FTT (a full-scale action) to give evidence and to prepare the company’s defence, and
(b) requiring the liquidator to relitigate would permit the sole director to cause the company to run a defence and seek to re-argue the same facts without being bound by the findings and decision of the FTT
Accordingly, the court held that the liquidator was entitled to rely on the findings of fact of the FTT in pursuit of the declaration sought, and that section 213 was satisfied as the business of the company was carried on with the intent to defraud HMRC as a creditor of the company.
Therefore, the sole director and controlling mind of the company was liable to contribute to the company’s assets in the sum of circa £1.4 million plus interest and the costs of expenses of the liquidation.
Re E-Tel (UK) Limited (also known as Wilson v Mehta)
Our content explained
Every piece of content we create is correct on the date it’s published but please don’t rely on it as legal advice. If you’d like to speak to us about your own legal requirements, please contact one of our expert lawyers.