In recent months we have witnessed an increase in enforcement and challenge procedures from Malta's Commissioner for Revenue in relation to pending taxes, tax compliance irregularities and enforcement procedures. In the past two weeks the Civil Court of Malta, Commercial Section has delivered several similar decisions whereby Malta's Commissioner for Revenue has sued the Registrar of Companies (as well as the struck off company's directors) in order to enforce the reinstatement of the struck off companies.
In one case it has also ordered the directors to comply with their obligations under the Companies Act. All three companies have a pending case in the Administrative Tribunal versus the Commissioner for Revenue whereby the substantive claims in relation to unpaid Value Added Tax are being decided.
The three relevant cases are:
- Il-Kummissarju tat-Taxxi vs Ir-Registratur tal-Kumpanniji - 40/2022 ISB;
- Il-Kummissarju tat-Taxxi vs Ir-Registratur tal-Kumpanniji - 4/2023 ISB;
- Il-Kummissarju tat-Taxxi vs Ir-Registratur tal-Kumpanniji - 17/2022 ISB.
All three cases have a similar situation. The companies were in default on their corporate obligations of filing the annual returns and accounts with the Registrar of Companies. In one case a company has failed to submit its annual returns for more than 10 years in a row. The Registrar of Companies has notified the directors about their situation of default and after not hearing back from them had struck off the companies from registry.
The Malta's Commissioner for Revenue has learned about the strike off of the companies during the tribunal hearings and have challenged the deregistration in the court. Considering that the Commissioner for Revenue has pending cases against the companies, their strike off would seriously prejudice against any enforcement and collection of the taxes due.
In all cases the Commissioner for Revenue relied on Article 325(4) of the Companies Act which allows any creditor who is aggrieved by the strike off of a company to initiate proceedings to reinstate the company within a 5-year deadline from the date of publication of the notice of the strike off.
In all three cases the Commissioner for Revenue won, and the Registrar of Companies was ordered to reinstate the companies. In 17/2022 ISB case the Court has also issued an order to have the company's pending corporate filings restored to lawful order by the directors or face personal liability for penalties.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.