Recent Government statistics reveal that winding up petitions issued by HMRC are increasing dramatically with a 14,800% surge since the start of the year. With many businesses struggling throughout the UK, our business recovery and insolvency experts examine the dramatic rise in HMRC winding up petitions and consider the impact on businesses across all industries.
As many business owners face immense pressure due to the current cost of living crisis in the UK, the rapid increase in HMRC-issued winding up petitions is another challenge struggling businesses encounter.
Despite previously being put on hold throughout the pandemic, the latest insolvency figures indicate that HMRC is now taking a more proactive approach when it comes to debt recovery – in particular, the issuing of winding up petitions.
What is a winding up petition?
A winding up petition (WUP) is a legal tactic used by creditors against businesses in order to recover monies owed.
In essence, where a company owes £750 or more, the creditor is entitled to issue a petition in court. If the order is granted, an insolvency practitioner is appointed as a liquidator by the creditor.
It is often seen as a last resort by creditors due to the high amount of expenses involved.
Winding up petitions figures 2022
Government statistics indicate a definite increase in the amount of recently issued winding up orders originating from HMRC, with an 82% rise between August and September 2022.
The spike in HMRC activity regarding debt recovery would appear to be a result of the rising debt to GDP levels and the Treasury’s need for funds.
Further figures are needed to determine whether this surge is a temporary measure being carried out by HMRC.
However, it is imperative for businesses in financial difficulty to act quickly and seek professional business recovery and insolvency expertise when needed – in order to avoid possible legal action.
How to stop a winding up petition
Once a winding up petition has been issued, it is critical that you act quickly in order to prevent your company from being subject to a winding up order.
There are a number of actions your business can take to help prevent your position getting worse. Potential options include:
- Paying all the debts owed to the creditor.
- Negotiating a Company Voluntary Arrangement.
- Disputing the monies owed – only where the debt is incorrect.
- Taking your company into administration.
Above all, it is crucial to seek professional insolvency advice as soon as you receive a winding up petition
How can PKF Smith Cooper help?
Here at PKF Smith Cooper, we understand that running a business is never easy. We are here to help you find a solution when the options may appear limited.
Our mission is to provide each of our clients with proactive financial and business advice – with a focus on prevention rather than cure.
For more information on how our business recovery and insolvency team can help your business, get in touch with us today. Our team of accredited insolvency practitioners has extensive experience in supporting businesses like yours.