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Bankruptcy

Volume 124: debated on Monday 7 December 1987

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To ask the Chancellor of the Exchequer what is the practice of the Inland Revenue in deciding, where moneys are owed to it, whether to take out bankruptcy proceedings rather than a garnishee order; and if he will make a statement.

The Inland Revenue, like any other creditor, must have been granted judgment by a court before an application for a garnishee order can be made. A garnishee application can only seek to attach, at most, the amount in judgment. Only certain types of debt are attachable. Bankruptcy proceedings, while normally based on a judgment of a court, are commenced in respect of all monies due to a creditor, including sums not subject to judgment. Thus, one consideration in deciding the appropriate course is the relative amounts of judgment debt, tax due outside judgment and sums attachable.If the Inland Revenue were aware of an attachable debt, it would also consider whether it was significant enough for garnishee to be worth while and what other enforcement processes, short of bankruptcy, were available. In respect of bankruptcy proceedings, it would take into account whether tax liability was accruing at a faster rate than prospective clearance by payments or recovery through other proceedings.