Feb 2014
Author: Chris Millar
If a liability order on which a Bankruptcy Petition was grounded, is set aside on appeal, this change in circumstance provides a ground for rescinding the Bankruptcy Order (under Section 375(1) IA 1986.) The setting aside of a liability order does not mean that a Bankruptcy Order ought not to have been made; despite there being no ground for the Petition, so the Order would not be annulled under Section 282(1)(a).
Appropriate action for a Court at the hearing of a Bankruptcy Petition where the Debtor is challenging a liability order in respect of unpaid council tax (or indeed HMRC assessment) is to adjourn the hearing, pending the final determination of the appeal. However, if there is no appeal at the time of the hearing, then there is sufficient ground for the making of a Bankruptcy Order. Unless and until a liability order (or assessment) is set aside, it is an undisputed debt capable of founding a Bankruptcy Petition.
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