Chancery Division.

Judgment delivered 29 June 1984.

Liquidation – Preferential debt – Priority – Value Added Tax – Floating charge granted to bank – Supplier paid VAT due under its returns in connection with goods supplied – Company had not yet paid supplier – Company into liquidation – Goods returned to supplier – Supplier issued credit note for purchase price and VAT – Whether VAT ranked as a preferential debt – Whether VAT took priority over floating charge – Finance Act 1972, sec. 41 (now VATA 1983, Sch. 7, para. 12).

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