A landmark Victorian hotel has been embroiled in a row with the taxman which led to an appearance at the High Court in London.

The company operating inside The Grand - the historic venue poised on the Leas in Folkestone - was the focus of a hearing instigated by tax officials who wanted to wind up the business over an alleged tax debt.

However, a top insolvency judge dismissed the winding up petition on Wednesday after it emerged The Grand Folkestone Partnership Ltd had gone into a creditor’s voluntary liquidation (CVL) agreement.

CVL is a process where assets are sold and the money distributed to the company’s creditors, and at the end of liquidation the company is dissolved.

Judge Cheryl Jones dismissed the petition after being told the CVL was entered into two days before Wednesday's hearing.

Under a CVL the directors of the company concerned agree to voluntarily bring the business to an end by appointing a liquidator to liquidate all of the company’s assets.

The size of the tax debt owed was not disclosed in court.

The latest problems come three years after the Grand's proprietor Michael Stainer, who bought the hotel in 1975, said he was considering legal action against HMRC.

That followed the arrest of him and his wife Doris, who are both officers of The Grand Folkestone Partnership Ltd, following a raid by HMRC on the hotel.

Mr Stainer was quoted later saying: “I don’t know what they were expecting to find. Nothing has come of it. We are considering taking action because they came on a fishing expedition.”

The hotel, which was built at the turn of the last century and was a favourite of King Edward VII, is a landmark building in Folkestone.

In recent times, it has become a favourite east Kent wedding venue.

The majority of the accommodation in the building is now in the form of flats.

Initially the premises were intended to provide residential accommodation for gentlemen but not long after the building was completed it was turned into a hotel.

In a statement released before the hearing, a Grand spokesman said the liquidation would not affect the way it carries out business.

“The companies involved have not been active at The Grand in nearly two years, and since they ceased operations business has been in no way interrupted or affected,” they said.

Adrian Dante, insolvency practitioner at MHA Macintyre Hudson, is overseeing the liquidation of the Grand Folkestone Ltd and Grand Folkestone Partnership.

Both companies are listed as being headed up by Michael and Doris Stainer, according to government records.

Speaking of Mr and Mrs Stainer's business set up, he said: “Given the numerous companies involved, it is a complex set up, which I’m trying to unravel.

“Any talk about the Grand’s future is just speculation, nothing more.”

HMRC uses winding up petitions and orders to collect debts due and to prevent circumstances from deteriorating further.

The authority only initiates the action where it believes it is best way to protect interests of other taxpayers and creditors.

A spokesman added: “We do not comment on identifiable individuals or businesses.”