Correct for HMRC to give cross-undertaking

In November 2023 HMRC presented a petition for the winding-up of the taxpayer on the basis that it owed about £7.39m in National Insurance contributions for the years 2017-18 to 2023-24 and was unable to pay. HMRC also applied without notice for the appointment of provisional liquidators. This was to preserve the company’s assets and secure its books and records.

The judge agreed subject to HMRC giving a cross-undertaking in damages. This was to compensate the other party for any harm that might have been suffered should the appointment of a liquidator not be confirmed at a full hearing. Although HMRC agreed to provide an unlimited cross-undertaking it challenged the judge’s decision to require the undertaking and the matter proceeded to the Court of Appeal.

In essence HMRC said it was acting as a public body in a law enforcement capacity so should not have...