HMRC v Payroll & Pension Services – HMRC required to give uncapped cross-undertaking on provisional liquidation application

This case concerned whether HMRC were required to give an unlimited cross-undertaking in damages on an application for the appointment of provisional liquidators.

At first instance, the court held that HMRC was required to give such a cross-undertaking. Subsequently, the winding up petition was dismissed and HMRC appealed the decision on the cross-undertaking.

The Court of Appeal dismissed the appeal reasoning that:

• A petitioner seeking the appointment of a provisional liquidator is ordinarily required to give a cross-undertaking in damages.
• This price is not exacted when the applicant is a law enforcement agency simply enforcing the law in the public interest as opposed to enforcing or protecting its proprietary or contractual rights.
• In FSA v Sinaloa Gold, the Supreme Court held that no undertaking was required by the FSA where it applied for injunctive relief under section 380 of the Financial Services and Markets Act 2000.
• But in the instant case, HMRC's position could not be equated with that of a public law enforcement agency (such as the FSA) for the following reason inter alia: in Sinaloa, the FSA had been given an express power to seek injunctive relief and was acting in fulfilment of public duties. In contrast, HMRC had not been given any special power to present a winding-up petition.
• Furthermore, it was not appropriate to cap HMRC's potential liability under their cross-undertaking. HMRC would plainly have the means to meet any award pursuant to the cross-undertaking. 

In reference to the matter of HMRC v Payroll & Pension Services (PPS Umbrella Company) Limited [2024] EWCA Civ 995, 23 August 2024.

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