Sending HTML email with drupal_mail()
As it turns out HTML email was infact enabled. The problem was the stylesheets that the email was being bundled with.

If you head to admin/config/system/mimemail you can choose to either bundle the email with your website stylesheets, or set-up a mail.css in your default theme directory.

I suspect if you're using a sub-theme and haven't got mail.css it'll just use the original theme mail.css which is probably not what you want.