In recent months HMRC have committed significant resource to recover unpaid taxes and ramped up their full range of enforcement options these include taking legal action including issuing winding up petitions. Our team can help.
An HMRC winding up petition is one of the most serious enforcement actions a business can face. It is issued when HMRC believes a company cannot or will not pay its tax debts. If the petition is not dealt with quickly, the company may face compulsory liquidation. Immediate advice is essential to protect the business, its directors and its assets.
At a glance
HMRC can issue a winding up petition for unpaid VAT, PAYE or corporation tax. Once issued, the petition progresses quickly and can lead to a winding up order. The petition may also be advertised, which can freeze bank accounts and prevent trading. We help companies challenge petitions, negotiate with HMRC and apply for court orders to protect continued trading.
What is an HMRC winding up petition?
A winding up petition is a formal request asking the court to place a company into compulsory liquidation. HMRC uses this procedure when it believes a business has failed to pay tax liabilities. The petition is issued under the Insolvency Act 1986 and begins a court process that can bring the company to an end if not addressed promptly.
HMRC is one of the most active petitioning creditors in England and Wales. Once a petition is issued, strict rules apply and the business must act quickly to avoid serious consequences.
Why does HMRC issue winding up petitions against companies?
HMRC issues petitions when it considers that a company is unable or unwilling to pay its tax debts. Common reasons include unpaid VAT, PAYE or corporation tax, missing time to pay instalments or a history of late or missed returns.
In many cases the petition follows earlier attempts to collect the debt, such as reminders, enforcement visits or unpaid time to pay agreements. A petition signals that HMRC is taking a firm approach and requires urgent engagement.
Summary: HMRC petitions are usually issued for unpaid VAT, PAYE or corporation tax and require immediate action.
How much tax must be owed before HMRC issues a petition?
Legally a creditor may petition for any undisputed debt over £750. In practice, HMRC typically issues petitions for higher amounts, often where a pattern of non payment has emerged. HMRC may also petition sooner where it believes the company is insolvent or where previous attempts to engage have failed.
The amount is not the only factor. HMRC looks at conduct, compliance history and the likelihood of recovery.
Summary: HMRC may petition for any debt over £750, but petitions usually involve higher liabilities and compliance concerns.
What happens after HMRC issues a winding up petition?
Once HMRC issues a petition, the court will list a hearing date. The company will be served with the petition and must prepare its response. The petition will remain private until it is advertised in The Gazette. If the petition is not resolved before the hearing, the court may make a winding up order.
The timeline moves quickly. The company’s ability to deal with assets, enter into transactions or make payments is restricted once the petition is known.
Summary: After the petition is issued, the case progresses quickly towards a court hearing unless urgent action is taken.
What are the consequences if the petition is advertised?
If a petition is advertised in The Gazette, the company’s bank accounts will usually be frozen. This can prevent the business from paying staff, suppliers or other creditors. Advertisement can also cause suppliers and lenders to withdraw support.
Once accounts are frozen, a validation order may be required to continue trading or to make necessary payments. Directors must take advice immediately to prevent breaches of the Insolvency Act.
Summary: Advertisement can freeze bank accounts and disrupt trading immediately. Our expert team can help unfreeze them.
Can you stop or delay an HMRC winding up petition?
The answer is yes. Our team can help.
In many cases it is possible to stop or delay a petition, but quick action is essential. The company may apply for an adjournment, negotiate payment terms with HMRC or challenge the debt if it is genuinely disputed. Evidence of solvency, funding or a realistic repayment proposal can support an application to delay the hearing.
Where necessary, the company may seek an injunction to prevent advertisement of the petition, provided the application is made promptly.
Can you negotiate a time to pay arrangement after a petition has been issued?
HMRC may consider a time to pay arrangement even after a petition has been issued, although it will require full financial disclosure and a clear proposal. HMRC will only withdraw the petition if it is satisfied that the arrangement is affordable and in the interests of the wider creditor group.
Engaging constructively with HMRC at this stage can make a significant difference to the outcome. Our expert team is headed by Andy Lynch who worked at HMRC for 18 years before joining us at FWJ. His knowledge in how HMRC works is invaluable.
Summary: Time to pay may still be available, but HMRC will require detailed evidence and clear commitments.
What is a validation order and when is it required?
Once a petition is presented, any payments made by the company may be void unless sanctioned by the court. A validation order under section 127 of the Insolvency Act 1986 allows specific transactions or categories of transactions to take place lawfully.
A validation order is often required if the company needs access to its bank account after the petition has been advertised. The court will require evidence that continued trading benefits creditors as a whole.
Summary: A validation order is needed to authorise trading or payments after a petition has been presented. We regularly apply for validation orders at court
What happens at the court hearing for an HMRC winding up petition?
At the hearing, the court considers HMRC’s petition and the company’s response. The judge may dismiss the petition, adjourn it to allow further evidence, or make a winding up order. The outcome depends on the company’s financial position, conduct and the evidence provided.
Representing the company effectively at the hearing is essential. Clear financial information and a viable repayment or rescue plan can influence the court’s decision.
Summary: The court assesses the company’s position and decides whether to adjourn, dismiss or grant the petition. We help put you in the position to get the best outcome.
What are the possible outcomes of an HMRC winding up petition?
Possible outcomes include:
- Withdrawal of the petition by HMRC
- Dismissal of the petition by the court
- Adjournment to allow repayment or refinancing
- Making of a winding up order leading to compulsory liquidation
The appropriate strategy depends on the company’s financial position, the accuracy of the debt and the feasibility of repayment.
Summary: Outcomes range from withdrawal to compulsory liquidation depending on the company’s circumstances. Our team will do all that is possible to avoid a winding up order being made.
How does FWJ help companies facing an HMRC winding up petition?
We act quickly to protect the business, challenge the petition where appropriate and negotiate with HMRC. We prepare evidence for adjournments, time to pay proposals and validation order applications. Our team advises directors on their duties and works to secure outcomes that safeguard the business and its stakeholders. We also have brilliant links with barristers and other professional advisers who we can call on to help clients as and when needed.
Summary: FWJ provides clear, experienced support to help companies respond to HMRC winding up petitions and protect their position.
Our brilliant HMRC winding up petition defence team
Our firm has a huge experience in dealing with and defending HMRC winding up petitions.
- Andy Lynch. Andy is an expert on a wide range of HMRC claims and before joining FWJ, he spent 18 years at HM Customs & Excise in their National Investigation Service. His experience is unrivalled in all types of HMRC claims including HMRC investigation defence, VAT claims, R&D tax credit defence, Account Freezing Orders, Tax Disclosure, Code of Practice 8 & 9 claims, winding up petition defence and much more.
- Stephen Downie is a partner with significant tax experience and is also a qualified accountant and previously spent time working at the Insolvency Service.
- Eve Loughrey is a senior associate and expert in obtaining urgent validation orders on behalf of clients facing HMRC winding up petitions.
- Anita Sharma. Anita is a Senior Associate specialising in tax litigation and financial disputes with HMRC. She advises high-net-worth individuals and major commercial clients on appeals against HMRC decisions, complex tax assessments, and enforcement proceedings. Anita has secured interim relief following HMRC revocations to keep clients trading during appeals and is known for achieving practical, results-focused outcomes in high-value disputes.
- Khaliq Martin. Khaliq is a Senior Paralegal in the tax disputes team assisting on a broad range of HMRC investigation and defence matters. Khaliq draws on his international litigation background and public sector experience to help prepare detailed evidence and submissions for use in appeals and settlement negotiations, ensuring cases are presented clearly, carefully and effectively.
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