The High Court ordered Burren Springs Ltd wound up after finding that it could not pay its outstanding tax debt. The company had asked the court to dismiss the Revenue Commissioners’ petition or adjourn it until its research and development tax credit claims were determined. The court refused both requests and made a winding-up order.
The petition was presented on 8 September 2011 by Gerard Harrahill, the Collector General of the Revenue Commissioners. It relied on a statutory demand served on the company in March for €139,105.47, comprising VAT, PAYE/PRSE and interest. The company did not pay within three weeks, giving rise to deemed insolvency under the relevant legislation.
The company argued that tax credits it claimed under section 766 of the Taxes Consolidation Act 1997 would, if approved in full, exceed its tax liabilities. Its director Brendan O’Mara said claims for accounting years ending June 2010 and June 2011 had been submitted to Revenue. A Revenue letter dated 1 December set out potential credits totalling €163,005, but said no decision had been made and the figures depended on the claims being accepted in full.
O’Mara’s affidavit said the company’s total tax and interest debt had risen to €152,124. He said the amount currently due was €108,735 after taking account of an earlier credit, and projected that credits expected to become available in 2012 and 2013 would reduce and ultimately extinguish the debt. Those credits had not been approved.
The company’s accountants proposed an instalment arrangement. Revenue rejected it, saying the credits had not been determined and the tax debt should be paid in full for the petition to be withdrawn. Revenue also told the court that VAT and PAYE/PRSI payment dates applied regardless of potential credits, and that corporation tax returns had only been correctly filed that week. The judge noted a dispute over whether Revenue had received one of the credit applications.
The court said no evidence had been given about the company’s wider financial position beyond its tax debt. Although it was informed, without affidavit evidence, that the company had a substantial claim against a third party, no proceedings had been issued. As the company could not pay the undisputed tax debt then due, the court had to assume it was insolvent for the petition.
The judge acknowledged sympathy for the company’s position but concluded that delaying the petition despite the petitioner’s insistence on an order would not be principled. She particularly noted that VAT and PAYE/PRSI represented sums collected from customers or deducted from employees’ salaries that should have been remitted to Revenue. The court therefore ordered the company wound up.