HMRC argued that at a creditors’ meeting to approve a prepack insolvency for the Mercury Tax Group Ltd it should have been given £8m worth of votes, rather than £1.5m admitted by the chairman, Edward Klempka.

He was an insolvency practitioner appointed by Mercury’s directors, and was attempting to effect a sale of the business to the management.

They argued there were impermissible deductions for payments to employee benefit trusts and substantial loans to directors.

The chairman’s power of quantification had to take account of events occurring since the date of administration and before the meeting.

[1] Once the HMRC had amended its notices and given sums even though they came after the administration date and even though they could be challenged, they should be counted.