Marcellus Adrianus Antonius Kooter v The Official Receiver & Ors
[2023] EWHC 594 (Ch)
Debra Elizabeth Adjei v The Official Receiver & Anor
29 June 2023
[2023] EWHC 1553 (Ch)
High Court
HMRC wrongly accused Debra of owing a large sum of money and tried to make her bankrupt. Debra proved she didn't owe the money. The judge said HMRC was wrong and made them pay for their mistake, cancelling the bankruptcy.
Key Facts
- •HMRC presented a bankruptcy petition against Debra Adjei for £115,862.23 based on alleged self-employment and late filing penalties.
- •Adjei maintained she was a PAYE employee, not self-employed, and communicated this to HMRC in March and November 2020.
- •A bankruptcy order was made in Adjei's absence in January 2021.
- •Adjei applied for annulment in April 2021, providing evidence of her employment status.
- •HMRC initially opposed the annulment but later became neutral, admitting the debt calculation was flawed.
- •The court annulled the bankruptcy order.
Legal Principles
In annulment proceedings under s.282 Insolvency Act 1986, conduct may assume greater importance than in normal proceedings.
Redbridge LBC v Mustafa [2010] EWHC 1105 (Ch)
The court has unfettered discretion in determining costs in insolvency proceedings, although principles of CPR are applicable.
Redbridge LBC v Mustafa [2010] EWHC 1105 (Ch)
There is no presumption that a petitioning creditor should pay trustee's costs if annulment is granted under s.282(1)(a).
Butterworth v Souter 2000 BPIR 582; Redbridge LBC v Mustafa [2010] EWHC 1105 (Ch)
A bankruptcy order, even if annulled, may have been properly made if based on a then-existing legal liability.
Redbridge LBC v Mustafa [2010] EWHC 1105 (Ch); Amin v London Borough of Redbridge [2018] EWHC 3100 (Ch)
Costs generally follow the event (unsuccessful party pays), but the court may make a different order considering all circumstances, including conduct.
CPR 44.2
Taxes should not be levied without the authority of Parliament.
Woolwich Equitable Building Society v IRC 1993 AC 73
A certificate under s.25A Revenue & Customs Act 2005 is sufficient evidence of an unpaid sum, but not of a debt's existence.
Revenue & Customs Act 2005, s.25A
Outcomes
Bankruptcy order annulled.
The petition debt was not 'due' from the Applicant; HMRC's claim was based on a factual error.
Applicant and HMRC bear their own costs of the petition and annulment application.
HMRC's conduct in pursuing the petition despite clear evidence of error, and their delayed response to the Applicant's appeal, warranted departure from the 'costs follow the event' rule.
HMRC to pay the Official Receiver's and Trustee's costs of the bankruptcy.
HMRC's errors led to the bankruptcy proceedings; their failure to act timeously on the Applicant's evidence prolonged the proceedings and necessitated the trustee's involvement.