A mix-up at HM Revenue and Customs led to a health worker being presented with a bankruptcy petition over an unpaid tax bill of £115,862, a bill that was wrongly charged to her.
HMRC’s Error
Ms Adjei was employed by a medical centre in east London. However, HMRC mistakenly thought that she was a partner at the practice. As a result, they believed that she owed more than £100,000 in unpaid PAYE and National Insurance contributions. HMRC was also under the impression that she earned more than £50,000 from 2013 and owed late filing penalties of around £2,000. This is even though she had earned ‘considerably less’ than this amount and was never required to submit a self-assessment form.
Ms Adjei let HMRC know that she had been on secondment for two years and was returning in December 2019. She also informed them that she was not self-employed, but an employee at the centre who, as part of her job, was responsible for making all payments for PAYE. While she had been away on secondment, however, a previous employee had not dealt with PAYE properly. Nevertheless, she argued that as office manager, she was not responsible for the liability; that was the responsibility of the partners of the practice.
Following several petition hearings, delayed by pandemic restrictions, a bankruptcy order was made against Ms Adjei in January 2021. Ms Adjei was not present during this hearing because it was conducted remotely and she had not been given any dial-in details.
The Court Held that HMRC’s Evidence was Unreliable
In April 2021, she applied to have the order annulled, again reiterating that she had never been a partner or employer at the health centre. HMRC, nevertheless insisted she was an employer, contending that this was confirmed by their records. They, however, failed to provide any evidence to support this claim.
Judge Sally Barber, presiding over the case, described HMRC’s evidence as unreliable and full of inaccuracies. She found that HMRC had failed to properly process or scan documentation relating to the case into its system, despite Ms Adjei sending multiple copies of documents. Furthermore, it was clear that HMRC’s record-keeping had been undoubtedly flawed. The court finally annulled the bankruptcy order against Ms Adjei and dismissed the petition in March 2023. It also ruled that Ms Adjei was not liable for any costs.
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