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Court of Appeal decides that payments to an EBT intended to avoid income tax and NICs did not have a ‘prohibited purpose’ (Purkiss v Kennedy and Ors)

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Published on: 09 April 2025

Published by a LexisNexis Tax expert

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Tax analysis: In Purkiss (as liquidator of Ethos Solutions Limited), the Court of Appeal considered the application of section 423 of the Insolvency Act 1986 (IA 1986) where transactions had been entered into with a view to avoiding income tax and National Insurance contributions (NICs). It held that the transactions were not undertaken for the ‘prohibited purpose’ of prejudicing the interests of HMRC in respect of a claim it may have made for the unpaid tax liabilities.

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