Bankruptcy Annulled When HMRC Ignore Disability Discrimination Obligations

A woman who was suffering from a chronic mental illness and had developed a phobia of opening mail had her bankruptcy annulled by the High Court recently after HM Revenue and Customs (HMRC) were judged to have breached their duties under the Disability Discrimination Act 1995.

The woman’s hobby was breeding horses and HMRC were advised by an informer that she was running a business. As is usual in such cases, HMRC sent tax returns for completion and, when these were not returned, raised assessments totalling nearly £200,000.

When payment was not forthcoming, HMRC served the woman with a statutory demand for payment and, when that remained unpaid, obtained a bankruptcy order against her, despite the fact that her mother had written to them explaining the situation.

In court, the woman was ruled to lack mental capacity to deal with the statutory demand or the subsequent procedures leading to her bankruptcy. HMRC’s failure to make reasonable adjustments (as required by the Act) in order to deal with her was found to be in breach of the Act. The bankruptcy order was therefore set aside.