The claimants appealed against bankruptcy orders made against assessed liability to income tax and penalties. As solicitors, their practice had suffered intervention, but they argued that their assets comfortably exceeded their liabilities and that they should have been given more time to pay.
Held: They said that as a result of the intervention within their practice, there would be a substantial tax reclaim which would effectively discharge most of the debt and that they could pay the rest. Henderson J said: ‘There is no doubt that the court retains a discretion not to make a bankruptcy order, even where the petition debt has been clearly established and any grounds of opposition have been dismissed. However, the authorities establish that in such circumstances the discretion to adjourn should only be exercised if there is a reasonable prospect of the petition debt being paid in full within a reasonable period: see Harrison v. Segger [2005] EWHC 411 (Ch), [2005] BPIR 583 per Blackburne J, and Re Gilmartin (a bankrupt), ex p bankrupt v. International Agency and Supply Ltd [1989] 2 All ER 835, [1989] 1 WLR 513 per Harman J. Furthermore, as Blackburne J said, ‘[t]here must be credible evidence to support such a prospect if the court is to grant an adjournment for payment.’
Judges:
Henderson J
Citations:
[2010] EWHC 13 (Ch), [2010] 2 All ER 126, [2010] STC 657, [2010] STI 230
Links:
Statutes:
Jurisdiction:
England and Wales
Insolvency, Income Tax
Updated: 01 September 2022; Ref: scu.392844