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HMRC‚ winding-up petitions increasing as business support ends
One of the UKes leading business recovery specialists, Leonard Curtis, has warned that HM Revenue & Customs (HMRC) are issuing winding-up petitions on an increasing basis in 2022 - with the government department adopting a stricter stance after a brief period in which it took a more relaxed attitude towards repayments.
Protective business measures introduced during the onset of the pandemic meant that winding-up petitions were rare occurrences in 2021 - with statistics showing that just eight petitions were filed during this calendar year.
But with this financial protection now removed, the government appears to be targeting firms with increasing forcefulness.
By the end of Q3 in 2022, 344 winding-up petitions had been advertised by HMRC. There has also been a steady increase each month - with 137 petitions filed in September 2022 alone.
Debt advisory expert Joe Douglas of Leonard Curtis said: HMRC have stepped up their recovery actions in recent months, with increased volumes of warning of winding-up letters and visits from HMRC enforcement officers.
Debts over £350,000 are considered large debts and are more likely to be accelerated to enforcement action.
Time to Pay (TTP) arrangements can still be agreed with HMRC - although the terms they are willing to consider have reduced over the last 12 months. Large debts in particular are restrictive in terms of what they will allow for a TTP - which are typically 12 months maximum.
Without a formal arrangement in place, HMRC can still pursue the debt. Businesses have received enforcement letters despite making payment to HMRC on an informal basis.
Whilst businesses in any sector can be impacted by the financial uncertainty of recent times, some sectors appear to be impacted more than others.
Joe added: The latest data on HMRC petitions advertised shows that the construction sector has received 21% of petitions in 2022, and administrative and support service businesses have received 19%.
2022 has highlighted again the importance of speaking to HMRC early, allowing us to agree the best arrangement possible and thereby reducing the pressures felt by the business.
Conrad Beighton, Director and Head of Midlands at Leonard Curtis also emphasised the importance of corresponding with specialists when liaising with HMRC. He stated: Petition details from court are now public record information - so companies are hearing from organisations with access to the information before the petition has even been served on the company itself.
Burying your head in the sand is simply not an option for directors - engaging with experts is absolutely crucial at a time when HMRC may be less inclined to give businesses leeway.
Early dialogue with professional advisers can help a company avoid a winding-up petition altogether. We are seeing a number of cases where, if liquidation is unavoidable, HMRC will not object to a director led liquidation provided the proposed decision date is before the court hearing and ideally before the petition is advertised.
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