Fraud and asset tracing against HMRC

In XL Insurance Company SE v IPORS Underwriting LTD and others [2021] EWHC 474 (COMM) the defendants allegedly misappropriated approximately £10m of premium funds due to be held on trust for the claimant insurers (XL).

XL contended based on bank statements and forensic accountancy analysis that the second defendant had then wrongly declared XL’s trust funds as ‘income’ on his tax returns to HMRC and paid the resulting ‘tax’ using XL’s funds. XL then sought to add HMRC to the proceedings on the basis of its receipt of such funds.

HMRC opposed the application adopting the position that even if there was no underlying tax due HMRC had a complete defence and was a ‘bona fide purchaser for value without notice’. This was because under TMA 1970 s 59B a taxpayer must pay the sum stated on his return (subject only to...