Summary

The process of distraint against goods for unpaid tax under the Taxes Management Act 1970 s.61 was not a form of execution within the Insolvency Act 1986 s.183 which prevented the creditor from retaining the benefit of execution, unless the execution had been completed before the commencement of the winding up.

Facts

The applicant liquidator (B) applied for directions in the winding up of a company. The company had had liabilities to the respondent Revenue in respect of PAYE tax and NICs totalling £51,961. The Revenue had distrained upon certain of the company's vehicles, machinery and equipment pursuant to the Taxes Management Act 1970 s.61 as amended, and had entered into a "walking possession" agreement which enabled the company to retain use of the distrained assets whilst preserving the Revenue's rights as a result of having levied distress. The company then went into creditors' voluntary winding up. There was a substantial deficiency as regards creditors of £2,428,196 and none of the Revenue's debt had been paid. The issue arose whether the process of distraint against goods for unpaid tax under s.61 of the 1970 Act was an "execution" within the Insolvency Act 1986 s.183 which applied where a creditor has issued, but not completed, execution against the goods or land of a company which was subsequently wound up and prevented the creditor from retaining the benefit of execution, unless the execution had been completed before the commencement of the winding up.

Held

Ordinarily the word "execution" was used to describe a process of enforcement of a judgment inter partes. It was possible that it could, in context, have a wider meaning; but the context would need to be such as to require that meaning. The predecessor provisions of s.183 had been construed as meaning that execution did not include distress. Although the 1986 Act was a new self-contained code, decisions under previous legislation could be relevant. In the instant case the provisions and concepts had been carried into the 1986 Act. There was nothing in the 1986 Act which suggested that Parliament intended to give the word "execution" in s.183 a different meaning. Therefore execution in s.183 was to be construed as not including distress under s.61, Herbert Berry Associates Ltd v Inland Revenue Commissioners (1977) 1 All ER 161 applied. Distress was not execution within s.183 even though the general policy of the Act could be said to be pari passu distribution. There was no inconsistency between s.61 of the 1970 Act and the provisions of the 1986 Act.

Judgment accordingly.