EWHC 13 (2010) Ross and Anor v HMRC

Bankruptcy orders - HMRC won

Case Summary:

In June 2008 HMRC served statutory demands on Mr Ross and Mr Holmes, who were solicitors, in respect of unpaid partnership and self assessment tax liabilities dating back to 2003/04.

The firm ceased to trade after the Solicitors Regulation Authority took away their books suspecting dishonesty and suspended their practising certificates. However, to stave off bankruptcy they hoped to offer HMRC the practice properties as security for the tax debts and to make terminal loss claims and error or mistake claims.

HMRC’s policy was not to accept security- they wanted cash. They stated that the individuals should go ahead and make their terminal loss claims to the Inspector and if indeed relief was due they would get it.

In Court HMRC said that they did not have an inflexible policy of refusing security but nonetheless did not want security in this case- it was not HMRC’s job to realise properties and act as a banker.

The High Court decided to allow the bankruptcies to go ahead even though terminal loss claims had in fact reduced the total debt considerably. The Appellants had a record of promising and not delivering and it was not unreasonable for HMRC to press for payment through bankruptcy.