iBalance Limited v Commissioners for HMRC [2026] EWHC 1959 (Ch)

Neutral Citation Number:[2026] EWHC 1959 (Ch)Case No CH-2026-000091IN THE HIGH COURT OF JUSTICEBUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES(INSOLVENCY AND COMPANIES LIST) (ChD)Venue The Rolls Building,, Fetter Lane,London, EC4A 1NLDate Tuesday 7 July 2026Start Time: 11.30 Finish Time: 11.50
Before
THE HONOURABLE MR JUSTICE ADAM JOHNSON
Between
IBALANCE LIMITEDAppellantCOMMISSIONERS FOR HM REVENUE AND CUSTOMSRespondent
MATTHEW COLLINGS KC (instructed by Esquire Solicitors) for AppellantCHRISTOPHER BROCKMAN for Respondent
Approved JudgmentIf this Transcript is to be reported or published, there is a requirement to ensure that no reporting restriction will be breached. This is particularly important in relation to any case involving a sexual offence, where the victim is guaranteed lifetime anonymity (Sexual Offences (Amendment) Act 1992), or where an order has been made in relation to a young person.This Transcript is Crown Copyright.  It may not be reproduced in whole or in part other than in accordance with relevant licence or with the express consent of the Authority.  All rights are reserved.Digital Transcription by Marten Walsh Cherer Ltd.,2 nd Floor, Quality House, 6-9 Quality Court, Chancery Lane, London WC2A 1HP.Telephone No: 020 7067 2900. DX 410 LDEEmail: info@martenwalshcherer.comWeb: www.martenwalshcherer.com
[1]This is a matter with a short history but a complicated background.[2]The immediate issue is an application to stay winding-up proceedings pending the outcome of an appeal from a decision of ICC Judge Prentis given on 30 March 2026, by which he refused to continue an injunction granted by Meade J without notice on 17 March restraining advertisement of a Petition presented by HMRC on 23 February. The debtor company is IBalance Limited.[3]The Petition debt is stated as £1,222,524.02. The bulk of this figure is based on a VAT return submitted by the company itself for the VAT period ending 20 November 2025. The return was submitted on 5 January this year and was due for payment on 7 January but has not been paid.[4]HMRC’s evidence is that in early 2026 it became concerned about the company’s bona fides. The source of the concern was the fact that the amount of VAT payable under the January return represented a very significant increase over that payable in previous returns which had been in the region of £25,000. HMRC say they therefore took steps to protect their position.[5]A one-day letter of demand was sent on 19 February 2026 and, as noted, the Petition was then presented on 23 February and on 27 February was served at the company’s registered office. This was a serviced office premises, however, and it appears there was some delay in the Petition actually coming to the notice of the company’s directors. That did not happen until about 11 March and by then steps were already in train for the Petition to be advertised, which in fact happened on the same day, 11 March 2026.[6]Apparently not knowing about that, the company made a without notice application to restrain advertisement before Meade J on 17 March. He granted an injunction on undertakings by the company, including an undertaking “to pay the debt claimed in the Petition if its further application to stay or strike out the Petition is unsuccessful”. Meade J was shown copies of bank statements demonstrating an overall balance of approximately £1.23 million, i.e. a sum in excess of the Petition debt.[7]There was a return date on 30 March. In the meantime, the advertisement which had already been posted was withdrawn.[8]At the hearing on 30 March, however, ICC Judge Prentis declined to continue the injunction. There is no approved transcript of his judgment available but there is a note which gives a sufficient sense of his reasoning for present purposes. The conundrum he faced was that the company was saying it could afford to pay the Petition debt but had not been able to do so: advertisement of the Petition had resulted in its bank accounts being frozen in the usual way and so it was caught in an absurd situation where its ability to pay the very debt on which the Petition was founded was being compromised by the existence of the Petition itself.[9]ICC Judge Prentis was unpersuaded by this. It is plain from the note of his reasons that he was anxious about the unexplained expansion of the company’s business. He was also concerned about the position of the company’s unsecured creditors and thought the proper course, which would require provision of more detailed evidence by the company, would be for it to make an application for a validation order under section 127 of the Insolvency Act 1986. ICC Judge Prentis therefore refused to continue the injunction made by Meade J. In accordance with ICC Judge Prentis’s order the Petition was thus readvertised on 31 March.[10]It is that decision that the company now wishes to appeal, and it is in the context of that appeal that it makes its present application for a stay. An Appellant’s Notice was issued on 14 April and on 15 April an issue letter was sent by the Court requiring the appeal bundle to be filed by 20 May.[11]The stay application was dealt with on the papers by Fancourt J on the same day, 15 April. He refused the application. It is apparent from his reasons that he thought there would be little point in restraining readvertisement of the Petition as such because that had happened already. Instead, he assumed that the company’s real objective was to stay the hearing of the Petition. His reasoning, in short, was that if that was the company’s objective then it should make its arguments at the hearing of the Petition, either as grounds for dismissing it, or for adjourning it in order to allow the company time to pay the Petition debt.[12]The company requested an oral renewal of its stay application and so the matter comes back before the Court today, 7 July 2026.[13]Three further points may be noted. First, there is in the bundle an unsealed application to strike out the Petition dated 16 March 2026. I note again the undertaking given to Meade J which I assume was referencing this intended application. Its present status is unclear. Mr Collings KC has explained that there was apparently some confusion over payment of the relevant fee, but be that as it may, the fact is that the application has not been progressed now in about four months.[14]Second, as to the appeal, although there are grounds of appeal there is no skeleton argument and no appeal bundle has yet been filed; nor does it appear that any application has been made to extend time for filing the appeal bundle.[15]The third point to note is that the Petition is due for its next hearing tomorrow, Wednesday 8 July 2026.[16]Having summarised the background, let me now give my decision and state my reasons.[17]I am not persuaded it would be fair for me to intervene at this stage and make the order sought by the company.[18]To begin with, there is the immediate context. This is an intended appeal against a decision refusing an injunction to prevent advertisement. That is the point ICC Judge Prentis was concerned with. There is an air of unreality in now seeking a stay in support of that intended appeal because the Petition was readvertised on 31 March and so has been public knowledge for about three-and-a-half months now. I respectfully consider that Fancourt J was correct on this point in his reasons, and indeed would go further. It seems to me it would be wrong for this present stay application to be used as a vehicle for determination of issues which should really be dealt with on the hearing of the Petition. The formality of advertising the Petition is now a matter of history. What remains to be dealt with is the substance, and that should be resolved at the hearing of the Petition itself and not tangentially by means of a stay application made in the context of the present appeal.[19]I should say I am reinforced in that view by the further points that the appeal has not been progressed with any real alacrity, and moreover, that the company’s intended application to stay or strike out the Petition, which was plainly important in Meade J’s thinking, has not been progressed at all. I regard this as significant because the undertaking given to Meade J gave the impression to him that the company was intending to take steps to challenge the substance of the Petition. That it has failed to do, despite the undertaking it gave. I consider it would be inappropriate and unfair to allow it to make up for that deficiency by using the present application as a forum for ventilating its concerns.[20]In his submissions, one of the points made by Mr Collings KC was that the hearing of the Petition would, in practice, be a fait accompli because the arguments raised by the company would likely be the same arguments which had already failed before ICC Judge Prentis. He said that rerunning the arguments would no doubt be said by HMRC to be an abuse. He therefore argued that the proper course would be for them to be the subject of the present appeal rather than a rerun before another ICC Judge.[21]I do not agree. It seems to me that the context is different. The company’s own conduct is consistent with that because it accepted before Meade J that suspending advertisement of the Petition was one thing, but challenging the substance of the Petition was another. I do not see why the company should not be able to make whatever arguments it wants to at the hearing of the Petition. They will have to be assessed on their own merits. The Petition hearing is the logical and appropriate forum for the resolution of such points in light of circumstances as they now stand - which have moved on since the hearing on 30 March; and in light of whatever further evidence may be available - which need not be the same as that available on 30 March.[22]Mr Collings KC has also relied on some recent written reasons of Thompsell J given in granting a stay in a winding-up case called Re Hero Umbrella Ltd. In my opinion, however, this decision was no more and no less than an application of the general principle that a stay should be granted where the justice of the case requires it. As the Court of Appeal said in Leicester Circuits Ltd v Coates Brothers plc [2002] EWCA Civ. 474 at [13]:
“The proper approach is to make the order which best accords with the interests of justice.”
In my opinion, justice is best served in this case by refusing a stay, in short because the appeal which gives me jurisdiction is concerned with the question of advertisement, and on that the cat is well and truly out of the bag. Moreover, it is still open to the company to help itself in the context of the pending Petition, which after all is what it said to Meade J it would do, now almost four months ago.[23]As to that, at the heart of the impasse between the parties seems to be the point that the company does not wish to be forced to make an application under section 127 of the Insolvency Act, in circumstances where it says it is only being forced to do so because of the precipitate action of HMRC in sending a one-day demand letter and then presenting its Petition shortly thereafter, thus unfairly creating a situation in which it cannot pay without seeking a validation order first.[24]I can see some logic in that argument, but all the same, I am not persuaded that it creates a situation of such unfairness that what justice now requires is a stay in the context of the present appeal. For one thing, in terms of cause and effect, it is not correct to say that the present situation has only come about because of action by HMRC. It has also come about because of the company’s failure to pay its VAT when it fell due on 7 January this year. For another thing, although no doubt a section 127 application would involve expense, it would also promote transparency. In all the circumstances, it is not unfair to say that that may need to be the price the company pays in order to obtain dismissal or adjournment of the Petition.[25]For all those reasons, the renewed application for a stay pending appeal is refused. MR BROCKMAN: My Lord that leaves three consequential things. Firstly costs. We would ask for costs in the petition in the ordinary way. MR JUSTICE JOHNSON: Yes. MR BROCKMAN: The second is the directions I set out in paragraph 23 of my skeleton argument, which I do not think my learned friend has any objection to. MR JUSTICE JOHNSON: Yes. MR BROCKMAN: And the third is we ask that this application be marked as entirely without merit, on several bases, on the bases you have set out in your judgment, the primary ones being that the petition had been advertised already and, secondly, the substantive application has not even been issued let alone progressed. It was always doomed to fail and applications like this the court should; and in breach of the undertaking. Those are the reasons for totally without merit. MR JUSTICE JOHNSON: Thank you. Mr Collings. MR COLLINGS: I cannot resist costs in the petition. The directions that my learned friend seeks, stating when the fee was paid on the substantive application, I think, as I understand the position, we do not know, because it should have been, but I think what we need to do is just explain the situation with the two applications that there are, the strike out application and the restraint of advertisement application in so far as we know them, what we did to file them, how the fee was meant to be paid and so on, and indeed service of them. So we need to give full particulars in relation to those applications, and then I cannot, as I have said, object to getting on with the appeal. MR JUSTICE JOHNSON: Yes. Let us just take things in order. So costs is agreed. On directions, Mr Brockman, Mr Collings is suggesting modification to the proposed direction at paragraph 23.1.1, in effect to expand it. MR COLLINGS: That is right. I think what I am suggesting is wording along the lines, and my learned friend and I will never have a disagreement over the minute of order, full particulars of the issuing and service of these two applications. MR BROCKMAN: Filing, issuing. MR COLLINGS: Yes, issuing, filing, service and fee payment for the two applications, and obviously that is in so far as we know them. MR BROCKMAN: It is my learned friend’s instructing solicitors who will know what the position is, so in so far as I know them, it is not needed. They know whether they have filed it, they know whether they have served it, they know whether they have paid the fee. MR JUSTICE JOHNSON: I think, to be fair, what Mr Collings may say is that steps were taken by the solicitors but somewhere in the internal machinery of His Majesty’s Courts Service things came unstuck, so I think the limitation he proposes is designed to make an allowance for the fact that there may be parts of the story which his client does not have knowledge about. That seems fair enough. MR BROCKMAN: My Lord, I will amend that to setting out in full particulars of the filing, issuing and service and the payment of the fee of the two applications in so far as they are aware of them. MR JUSTICE JOHNSON: Yes. MR COLLINGS: Thank you very much. MR JUSTICE JOHNSON: Thank you. And then as to entirely without merit, Mr Collings, what do you say about that? MR COLLINGS: It is a bit unkind and I do not think it is right. Also I do not think it goes anywhere because I cannot have another go at this so it is just a point that is a dig at us really. MR JUSTICE JOHNSON: Well, it may go somewhere, it depends how many further applications of like kind are made. MR COLLINGS: Indeed. MR JUSTICE JOHNSON: I think, Mr Brockman, I am not persuaded I should certify the application as wholly without merit. I am close to it, but I do not think it is wholly without merit. There is, as I have said in my ruling, something in the point, the principle identified by Mr Collings that there may be unfairness inherent in a creditor taking precipitate action and producing a situation in which a debtor is put to the trouble and expense of making a section 127 type application in order to be able to pay the very debt which forms the basis of the petition. I think there is not quite a chicken and egg, but there is something in that, and for the reasons I gave I do not think the point is actually that compelling in the context of this case, but I all the same do not think that it was so entirely without merit that it was improper for it to be advanced as an argument, which is really what you are inviting me to do. MR BROCKMAN: My Lord, we say in circumstances where it was on a return not on an assessment or anything like that, but my Lord I hear what you say. MR JUSTICE JOHNSON: Very good. If I could leave the two of you please to work up a draft minute of order I would be grateful. MR COLLINGS: Yes of course, my Lord. MR JUSTICE JOHNSON: Is there anything else? MR COLLINGS: No, that disposes of all matters and we are much obliged to you, and indeed to your Clerk for having set this all up so very efficiently. MR JUSTICE JOHNSON: Thank you all very much. MR BROCKMAN: Thank you, my Lord. -------------------- (This Judgment has been approved by the Judge.) Digital Transcription by Marten Walsh Cherer Ltd 2nd Floor, Quality House, 6-9 Quality Court, Chancery Lane, London WC2A 1HP Tel No: 020 7067 2900. DX: 410 LDE Email: info@martenwalshcherer.com Web: www.martenwalshcherer.com