The Court of Appeal in this case considered the application of section 423 of the Insolvency Act (IA) 1986 where transactions could have been entered into with a view to avoiding tax liabilities.
In respect of s423 IA 1986, the Court of Appeal held that entering into a transaction in order to ensure that a liability does not accrue does not involve a prohibited purpose under s423(3) IA 1986.
It was also held that Parliament is unlikely to have intended s423 to extend to commonplace “tax mitigation” which is not generally considered to be objectionable.
Alongside consideration of s423 IA 1986, the Court of Appeal emphasised that the circumstances in which an appellate court is justified in interfering with a finding of fact made by a trial judge are limited.
The Court looked to case law and drew out phrases describing when an appellate court should be able to intervene, including where they feel “compelled to do so” and where the judge’s conclusions are “rationally insupportable”.
The Court also clarified that the possibility that a different judge would have made different findings does not matter when appellate courts consider the trial judge’s conclusions.
Read the full judgment here.
