HMRC has been granted a freezing injunction against Ducas Ltd and two other related businesses to freeze assets to the value of around £171 million.
The underlying accusation is that Ducas failed to pay secondary Class 1 National Insurance Contributions (Employer NICs), and prepared false documentation to cover it up.
In a fairly short judgment, Mr Justice Thompsell decided that HMRC demonstrated a good arguable case, creating a serious issue to be tried against Ducas and it had otherwise satisfied the requirements for granting a freezing order against the company.
On the facts, it was deemed just and convenient to grant a freezing order against Ducas.
Often in these cases, it can be challenging to establish that there is a real risk of dissipation of the assets. However, in this case, there were four compelling reasons to demonstrate the risk:
- Dishonesty
There was ample evidence of dishonesty in the form of Ducas providing fraudulent documents to its customers. - Suspicious payments
Ducas appears to have made payments of very substantial sums to its parent company without any apparent commercial justification. - Liquid assets
Ducas’ assets are mainly cash or rights to receive cash, which are readily capable of dissipation. - Beneficial owner located abroad
The person who appears to be the Ultimate Beneficial Owner resides outside the jurisdiction, in Cyprus.
The evidence of dishonesty was also an important factor in drafting the order, which included additional requirements relating to the retention and non-destruction of records. The judge commented that these further stipulations seem “obvious, given the strong prima facie evidence of dishonesty here.”
The Court also considered whether a winding-up petition would be more appropriate than a freezing injunction. However, it was decided that it would not be realistic in this case. It would involve a degree of delay during which Ducas’s assets could be dissipated, and Ducas was deemed likely to challenge the basis for the petition.
Read the full judgment here: The Commissioners for HMRC v Ducas LTD & Ors [2024] EWHC 3132 (Ch)
