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Ash, Solicitor
Category: Law
Satisfied Customers: 10916
Experience:  Solicitor with 5+ years experience
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In a situation where a company (say X) is one of a number of

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In a situation where a company (say X) is one of a number of parties who have pending legal action against party (say Y) but Y is owed money by X.What happens to the proceeds of any subsequent successful legal action against Y if X has already been put into receivership by Y before such a ruling has been reached?

Alex Watts : Hello my name is XXXXX XXXXX I will help you with this. Please note that I am a working Solicitor and may be on and offline as I have to attend Court and meet with clients, even at weekends. As such you may not get an instant response when you reply, but rest assured I will be giving your question my immediate attention upon return You do not need to wait here as you will get an email when I reply.
Alex Watts : Has the trial happened already please?

It involves Rank Org's case against HMRC and "piggy back" action by smaller concerns against HMRC in respect of VAT wrongly charged on gaming machines.The UK and European courts origionally found in favour of Rank but HMRC appealed and won.However Rank have won the right to appeal further and the case might take a year to be held.


There are 2 more actions pending relating to wrongly charged VAT on gaming machines which will be different cases and still stand a chance of success even if the first case is lost.

Alex Watts : Ok. So one of the companies in the appeal has gone into liquidation?

HMRC having lost the first case paid out but having won their appeal now want the money back with interest.


No .Not Yet

Alex Watts : Ok. And the further appeal did that seek a stay of enforcement?
Alex Watts : upon leave to appeal I mean?

Don't think so ,HMRC are demanding repayment

Alex Watts : Ok. If there has been no further appeal then money is owed to hmrc.
Alex Watts : If there was leave further appeal, then this should have included a stay on enforcement pending that appeal.
Alex Watts : If it did then hmrc can not request payment.
Alex Watts : If it did not then hmrc can demand payment.
Alex Watts : Can I clarify anything for you about this today please?

If the company went into administration or was wound up would the share holders benefit from a subsequent award in their favour

Alex Watts : It would go to the liquidators and then be up to them how it was distributed.

Are you saying the company needs to be kept alive to benefit(or its shareholders) from any future court action against HMRC.

Alex Watts : Well if it is not then the action against that company and hmrc ceases.
Alex Watts : The liquidators may or may not continue with the further appeal.
Alex Watts : If is a matter for them
Alex Watts : Can I clarify anything for you?

It will be Rank who are continuing the action bur the point is if it is found the the company was wrongly charged VAT and we are talking£3m why is it not owed to the shareholders

Alex Watts : It will, if there are in the action go the liquiated.
Alex Watts : Liquidator.
Alex Watts : The liquidator will then decide how to distribute it.
Alex Watts : It is for the liquidator to make any claim against hmrc it thinks appropriate

So to clarify if the receiver/liquidator has paid off all the creditors he can keep the action going against HMRC even for 2/3 years and return funds claimed from HMRC to the shareholders of the co.

Alex Watts : Assuming there are no other claims, yes
Alex Watts : Can I clarify anything else

Would he need to be uncentified to carry on the claim

Alex Watts : That would be for the liquidator to carry on

Sorry not clear on that

Alex Watts : Ok. You can't carry on as shareholders.
Alex Watts : If the company is in liquidation only they can carry on the claim

So we would be reliant on the goodwill of the IP (insolvency practioner)could he /she keep the proceeds


of future action.Would the company be better seved by appointing an IP voluntarily?

Alex Watts : No. If there was enough left, it would be given to shareholders, if there was a surplus.

Even though the company is no longer trading?

Alex Watts : Yes.
Alex Watts : the liquidator liquidates assets and any surplus goes to shareholders.
Alex Watts : Can I clarify anything else?

Finally.So even after say 5 years and it was found that the company should not have paid VAT in can be reclaimed and distributed to the shareholders

Alex Watts : Yes by the liquiator.
Alex Watts : If this answers your question could I invite you leave feedback on my service which I hope has been excellent today, if you need more information or help then please click reply.Please remember that I am always happy to help if you have future questions, even if I am in Court I can normally respond within a few hours. For future information, please start them with ‘For Alex W’.Please bookmark my profile if you wish for future help:

Got there in the end.Thanks Alex, sorry for slow(man) typing

Alex Watts : No problem, please remember to leave feedback before you go and good luck.

will do--BAD, Only joking :-)

Alex Watts : Thans.
Alex Watts : thanks.

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