Re Van Hool McArdle Ltd

CourtHigh Court
JudgeMiss Justice Carroll
Judgment Date01 January 1982
Neutral Citation1982 WJSC-HC 2674
Date01 January 1982
Docket NumberNo. 1351P./Record No. 1978

1982 WJSC-HC 2674


No. 1351P./Record No. 1978



Judgment of Miss Justice Carrolldelivered the 21st day of May 1981


The Liquidator has sold certain properties which were subject to incumbrances and has incurred a liability for Corporation Tax on chargeable gains accrued on that sale under the Capital Gains Tax Act 1976. The questions which the Liquidator has asked the Court to answer are as follows:-


1. Whether or not the Capital Gains Tax payable in relation to the sale is an expense incurred in the realisation of an asset within the meaning of Rule 129 of the Winding-Up Rules Order 74;


2. If it is, can it be deducted from the proceeds of sale payable to the mortgagee(s) and;


3. Is the tax merely a necessary disbursement of the Liquidator under the third heading listed in Order 74 Rule 129.


A similar question to Question 1 was asked in In Re Mesco PropertiesLimited ( 1980 1 W.L.R. 558 and on appeal 1980 1 W.L.R. 96). I accept the reasoning of Brightman, J., in answering "no" to that question.I adopt his argument which is set out in 1979 1 W.L.R. at page563:-

"Nor do I think that Corporation Tax on a capital gain made by the Liquidator when he sells an asset is "an expense incurred in realising" that asset. It is not like the fees payable to a solicitor or to an estate agent in connection with a sale, or the advertising costs of a sale which are clearly part of the expenses of the sale. The tax does not assist the Liquidator to sell. Nor is it a necessary result of the sale. It is merely a possible consequence of a sale at a profit. Even when a sale has been made at a profit the Liquidator may not know whether any tax will ultimately be payable. This will depend on what, if any, profits, including both income and chargeable gains or losses, arise in that financial year and whether any losses can be carried forward from a previous year. The tax is merely a possible consequence of the realisation of an asset at a profit; it is not an expense which the Liquidator incurs for the purposes of, or as a direct result of realising that asset, and therefore it is not, in my view, an expense incurred in realising it".


Therefore the answer to question 1 is "No".


Accordingly question 2 does not arise.


Question 3 is similar to question B also asked in ...

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