Judgment Hand Down: Purkiss v Kennedy (Court of Appeal)

The case concerned payments made through an employee benefit trust (EBT). This form of tax planning was widespread in the period 2005-2015 but was subsequently held by the Supreme Court in the Rangers litigation ([2017] UKSC 45) to be ineffective.

The money had been paid into the EBT by a company called Ethos Solutions Limited. It subsequently entered liquidation and the liquidator pursued a section 423 Insolvency Act 1986 claim against the ultimate recipients of the money. The key issue for the Court of Appeal was whether an intention to avoid the incurring of a tax liability to HMRC was a prohibited purpose under section 423. The Court of Appeal held that it was not because, in short, seeking to avoid the incurring of a liability does not involve seeking to prejudice a potential creditor.

Daniel Bayfield KC and Jon Colclough (with solicitor advocate Luke Tucker Harrison) acted for the successful respondents, instructed by Keidan Harrison LLP.

The judgment is available at https://www.bailii.org/ew/cases/EWCA/Civ/2025/268.html