Credit, Collections & Insolvency News
New analysis of insolvency statistics has indicated that the HMRC is becoming increasingly aggressive when it comes to issuing Winding Up Petitions according to ReSolve.
Winding Up Petitions are a tactic of last resort to claim back monies owed and could be seen as a draconian move, giving businesses a short period to repay debts in full, consider its corporate restructuring options or risk being forced into the terminal event that is compulsory liquidation.
Government statistics show an 82% jump in HMRC-originated winding-up petitions gazetted from August to September 2022 – and a 14800% increase since the start of the year. The presentation of petitions largely disappeared during the pandemic due to protective measures implemented by the government and perhaps a willingness to hold off because of the pandemic, but they have come back sharply in recent months, perhaps driven in part by the Treasury’s need for funds as debt to GDP levels continue to rise and tax cuts have become an increasing focus of the government.
Whether this is a temporary rise remains to be seen, nonetheless businesses must be prepared to act quickly in the event of being issued a petition and should speak to an accredited insolvency practitioner, such as ReSolve, as a matter of urgency.
This is a period of immense stress for many businesses and the rising threat of action from HMRC only adds to this. Businesses should be proactive in managing their debt; the sooner directors take action the better. Independent business advisory firms can be immensely helpful and make sure that companies do not get caught in HMRC’s crosshairs.
Ben Woodthorpe, Partner at ReSolve said “In all my years of working in this industry I have never seen such a dramatic increase in winding up petitions being issued by HMRC. A petition is an aggressive act which places huge strain on a business and if the right advice is not sought, can put directors personally at risk.”
“This is not just a backlog of cases washing through the system. Anecdotally, I have heard from several in the industry that this is seemingly a new pattern of post pandemic behaviour, with a loss of forbearance becoming evident.”
“Ideally, a business would never be in this position, but the key is to act quickly and ensure registered office addresses are up to date and guardians of them are responsive. A business owner must get advice as soon as HMRC suggests it is getting legal advisors on board or makes recommendations to them to seek help, or they risk having their company forced into compulsory liquidation and, post advertisement, having its bank accounts frozen.”