HMRC winding up process
A winding up order for non payment of taxes can be frightening. But there are always things which can be done – negotiated settlements, company restructuring, disputing the claim, seeking business funding or applying for a validation order as just some of the choices. Let our experts help.
HMRC winding up process is crucial to understand.
HMRC issue hundreds of winding up petitions a year and have their own barristers and in-house legal team dealing with all of the winding up petitions. To an extent they are a very well oiled machine and it is always better for a company who has received an HMRC winding up petition to take expert legal advice to deal with HMRC. Otherwise, with their knowledge of the winding up process, you can easily come unstuck.
At Francis Wilks & Jones we have a team of experts who have many years of experience dealing with HMRC and understand the HMRC winding up process;
- one of our consultants, Andy Lynch, formerly spent 18 years at HMRC before joining our law firm. His knowledge of the inner workings of HMRC are also very useful when dealing with the different departments there;
- knowledge of the HMRC winding up process can dramatically assist your chances of success and our team at Francis Wilks & Jones have the expertise to help you through what can often be a frightening experience;
- we can help make a validation order application to help you to continue trading without risk of personal claims against the directors.
The winding up process and procedure is not always easy to understand and if you start making mistakes, it can inadvertently lead to a winding up order being made and your company being placed into formal liquidation. If at all possible, you need to avoid these dramatic consequences of an HMRC winding up petition.
What to do if you receive a HMRC Winding up petition
A winding up order for non payment of taxes can be frightening. But there are always things which can be done;
- negotiated settlements,
- company turnaround & restructuring,
- setting out a dispute to the claim,
- seeking business funding or
- applying for a validation order to get court agreement to keep the company trading.
Let our experts help.
When faced with an HMRC winding up order, you should take immediate steps to alleviate the worst of the damage.
A winding up petition can quickly result in a company’s bank accounts being frozen and seriously affecting its ability to trade, take on credit and can result in suppliers demanding to be paid cash on delivery. A winding up order can also lead to significant adverse publicity.
Therefore, if you receive an HMRC winding up order, the key is to
- take immediate legal advice to work out whether the debt is due and if so, whether you can pay it. At Francis Wilks & Jones we have in-house experts including Andy Lynch who worked at HMRC for 18 years. We have the ability firstly to review the claim for the debt and work out if it is all genuinely due. On occasions, HMRC do get the wrong amounts in an HMRC winding up order.
- once that process has been completed, the key is try and negotiate repayments with the HMRC, particularly if your company has difficulty in paying the HMRC winding up petition in one go. The HMRC can be difficult to deal with but we have the experience of negotiating repayment plans with HRMC to avoid the worst of a winding up order being made.
It is important to understand that 7 working days after the service of the HMRC winding up order, the petition can be advertised in the London Gazette. If the winding up order is advertised in the London Gazette, this is when it becomes public knowledge and can hugely damage your company. It is difficult to know whether in any particular instance the HMRC will advertise the winding up petition but it is always a danger and one worth trying to avoid.
On occasion, the debt simply doesn’t add up and in those circumstances, you may consider an injunction to prevent the advertisement of the winding up petition. We have those experts in-house who can help prepare the injunction papers to prevent a winding up order being made.
The importance is to take quick action if you receive an HMRC winding up order. Not dealing with it can lead to very drastic consequences.
How to defend an HMRC petition
It is vital to take expert legal advice if you want to defend an HMRC winding up petition. Get is wrong – and your business will disappear and directors could be open to personal claims by the liquidator. Our brilliant team can help make sure you maximise your prospects of success and avoid mistakes.
“How to defend an HMRC winding up petition” is a common question for our firm.
We have dealt with many HMRC winding up petitions over the years and successfully helped many companies avoid the worst effects of an HMRC winding up order. As with all winding up petitions, defending them depends upon the circumstances of your case but your options could include the following:
If the entire HMRC debt is disputed, you can apply for an interim injunction at court to restrain or stop the HMRC advertising the winding up petition.
This will avoid it becoming public knowledge in the London Gazette and is critical if you are disputing the debt. If we set out the position clearly to HMRC prior to an injunction application, we can sometimes obtain an undertaking from them not to advertise the petition while the matter is considered further.
If part of the debt is disputed, and you are able to pay the undisputed element, we can help you through that process. The undisputed winding up petition debt should then be paid and our expert team can then seek dismissal of the petition from court.
If it is time you need in order to pay the debt, then we can help you with negotiating an instalment plan with the HMRC. This is not always easy to do but we have the experience to help you through this difficult process. The key is to take urgent action.
If it is time you need but need to continue trading then we can also help you obtain a validation order to legally continue to trade whilst you deal with the worst effects of the winding up petition.
The key is to deal with the winding up petition quickly as soon as you receive it. At Francis Wilks & Jones we have the winding up order experts to help you in this process and are well versed in all winding up order issues including how to defend an HMRC winding up petition.
Negotiating an HMRC petition
It is possible to defend an HMRC winding up petition, but only with expert legal help. HMRC are well known for taking a tough approach with companies which owe them money. But our team of lawyers supported by an ex HMRC expert of 18 years can help you keep trading. We often negotiate settlements for companies and resolve the petition by consent.
Negotiated settlements of HMRC winding up petitions can be difficult. HMRC often take a hard line on repayment of outstanding HMRC debts including National Insurance, PAYE, VAT and other types of debt.
We have many years of experience negotiating repayment plans with HMRC and understand the way in which they work. Simply put, you need to have a coherent and believable repayment plan if you are to avoid the worst effects of HMRC winding up orders. HMRC take the attitude that this is money due to the public purse and as such, do take a hard line on getting repaid. Having said that, they do take a sensible approach with regard to repayment of debts but the key is ensuring that you can prove that this debt will be repaid.
- we can help you through the winding up petition procedure and negotiations with HMRC;
- our aim always is to avoid the worst effect of a winding up petition against a company;
- our aim is to avoid you being at risk of personal claims and director disqualification;
- we can try and obtain a validation order if needed – so you can continue to trade without personal risk whilst the winding up petition is resolved.
Once the petition debt has been paid or settled – it is vital to get the petition dismissed from court. This stops it being supported by other creditors and avoid the company getting wound up by someone else. Our team can help with this vital process.]
Is the debt disputed or has it been paid in full?
When people approach us and ask “can an HMRC winding up petition be withdrawn”, the first thing to do is for us to check whether the outstanding debt is any way disputed and if not, has the winding up petition debt been paid in full.
- if the petition debt has been paid in full then often, the next step is to deal with the petitioner’s legal costs which they will also want paying as part of having to go through the winding up order process. There are costs of issuing a winding up order and commonly, the petitioner will want these costs paid before it will agree to the winding up order being dismissed.
- once the issues of the HMRC’s winding up petition costs have been resolved (we can do this by negotiation with the HMRC) the actual process for withdrawing an HMRC winding up petition is relatively straightforward but one which is crucial to get right. It involves making an application to court and e-filing it through the court’s system.
At Francis Wilks & Jones we are fully linked to the court electronic systems and can arrange for the winding up petition withdrawal application to be made. We can do this swiftly and on the same day and maximise the prospects of the HMRC winding up petition being made. That will then avoid a winding up order being made.
Speed is very important – don’t delay
It is always important to ensure that the winding up petition is withdrawn as quickly as possible after payment of the petitioner’s debt and costs.
The reason is that other creditors of the company if they find out about the winding up petition can support it formally and this then leads to the company not being able to withdraw the winding up petition without paying that extra debt.
There is a danger the position can snowball if many creditors start supporting the original petition and that can then ultimately lead to the company being wound up even though the original petition debt was paid.
Therefore, it is important to act quickly and make that application to withdraw the winding up petition to avoid a winding up order being made. At Francis Wilks & Jones we can help you through this process to maximise the prospects of success for your company.
HMRC – general information you should know
It is a statutory requirement that all individuals and companies in the UK account for tax to His Majesty’s Revenue and Customs (“HMRC”) in a timely and accurate fashion.
Introduction
All companies and businesses should ensure they stay in full communication with HMRC throughout their period of trading and existence, ensuring that all tax returns are prepared accurately, filed on time and paid in accordance with the correct tax liability for the company/business.
Common problems if you fail to communicate with HMRC
Problems arise where such levels of communication are not maintained and returns or payments are missed, and following which consecutive occurrences may lead to a pattern of behaviour resulting in one of the following scenarios:
- penalties, surcharges and interest;
- tax investigations;
- company insolvency;
- individual insolvency;
- claims by liquidators or administrators;
- director disqualification claims;
- claims by the registrar of companies;
- claims by HMRC.
Business distress
If your company or business is facing difficulties, then it is important to ensure that you maintain communication with HMRC. When presented with silence, HMRC’s only option of recourse is to issue proceedings, which will usually result in the company being wound-up and/or your personal bankruptcy.
It may be that your business is facing a sticky patch, is searching for funding or is about to secure a new contract, pending which some breathing space is required. Whilst HMRC will not normally provide such breathing space, by keeping them aware of the challenges your business is facing they are less likely to proceed as quickly with enforcement of the outstanding tax liability, and will often work with you to find a repayment strategy (if realistic).
Need to continue filing returns
Even if your business or company is unable to meet tax liabilities, it is important to continue adhering to the statutory duties to file tax returns, particularly PAYE/NIC returns and VAT returns.
- if these returns are not filed, HMRC will then raise statutory assessments of what they think has become due (usually based on recent trading results) which may not be accurate and are often overstated;
- these assessments, whilst they may be overstated, are capable at law of supporting legal proceedings for enforcement of the tax liability, the most common of which is a winding-up or bankruptcy petition.
By continuing to file returns, even where trading is making payment difficult, you are able to mitigate the tax liability or ensure that you or your company are being pursued for the correct sums and this will also assist ongoing negotiations to repay this debt.
Benefits of negotiations
The benefit of negotiating with HMRC are far greater than most companies and businesses truly understand.
A company or business, particularly where represented by an experienced professional, can often agree instalment arrangements to pay arrears of tax via a time to pay agreement which is then capable of taking the pressure off whilst the company or business continue to focus on business survival and growth;
- significantly reduce VAT Security amounts sought in the notice of requirement, particularly where a director’s new company is a completely different business or where the trading income is considerably lower;
- assist with accelerated payment notices negotiations and result in much clearer information being presented to HMRC and a considerable reduction in the accelerated payment sought (whilst negotiations are ongoing in respect of the underlying tax liability).
HMRC winding up petition list
If you are concerned your company is on the official companies court winding up petition list – we can help. If a petition has been issued, it is vital to act quickly and avoid the petition being advertised in the London Gazette. Whatever your situation, our team will have dealt with it before.
If you believe an HMRC winding up petition has been issued against you, it is possible to check the winding up petition list to see whether your company’s name is on it. However, this is not always easy as the court systems are not particularly great and as such, Francis Wilks & Jones can help you with the HMRC winding up petition list and also to make sure you are fully prepared for the winding up petition hearing if one is to take place.
- it is important to understand that at court, well over a hundred winding up petitions can be heard in one morning and a very rigorous timetable is set by the court and it has a very clear list in which the petitions are heard.
- this includes the HMRC winding up petitions and if you arrive late or miss the time, then a winding up order can be made even if you intended to turn up to court to argue for one not to be made.
- it is therefore very important that you understand about the HMRC winding up petition list and at Francis Wilks & Jones, we can help you with this.
