Insufficient voting rights

A tax-planning company went into administration owing HMRC corporation tax of approximately £9 million for six accounting periods.

The company had filed returns for three of the periods but had not responded to letters from the Revenue that made enquiries into the returns. The department therefore issued notices of amendment.

The administrators later sent their report to the company’s creditors with their proposals for achieving the purpose of administration.

HMRC voted against the proposals but their vote was only admitted in part which meant that £1.5 million tax would be claimed. The taxman applied to vary the decision.

The Court of Appeal found that HMRC had made a clear case to support their claim that corporation tax was due. It was not sufficient for the administrators to deny the amount of the liability and reduce it without putting forward evidence or arguments in support.

The court ruled...