HMRC Debts & Winding-Up Petitions FAQs: Answered by Solicitors


Dealing with HMRC debts and Winding-Up Petitions can be tough.These petitions are a serious legal action that can have major consequences for both the company and its directors. In 2023, the High Court received nearly 6,000 Winding-Up Petitions, with HMRC accounting for almost 46% of them. Understanding how to manage HMRC debt and the associated winding-up petitions is essential for safeguarding the interests of both the company and its directors. It involves going  through procedural requirements and adopting strategic tactics to mitigate risks and liabilities. 

Our Expert Dual-Qualified Solicitors & Barristers

As specialists in winding-up cases, we are here to assist companies in managing large debts or disputing claims in petitions. With our expertise, we can help negotiate extended timeframes and resolve debts, even if creditors are initially unwilling to agree to reasonable terms. We employ legal strategies to advocate for the company’s interests.

What to consider with HMRC debt and Winding-up Petitions?

It’s important to communicate with HMRC early to avoid Insolvency court proceedings. At Lexlaw, our dedicated HMRC Defence team assists both companies and individuals facing tax challenges, including statutory demands, bankruptcy or winding-up petitions.

Ensure a proactive approach by engaging with HMRC as soon as possible, seeking early legal advice, and exploring all available options with our experienced advisors. 

What to Do When Faced with HMRC Debt Claims?

  1. Challenge the Claim: You can dispute the accuracy of the debt, either formally through court channels or informally by communicating with HMRC.
  2. Negotiating Time-to-Pay (TTP) with HMRC: Presenting a realistic TTP proposal to HMRC within recognized timeframes can often lead to acceptance
  3. Consider Legal Guidance to dispute the debt. 

If you have received a HMRC winding up petition we are able to provide urgent help, advice or representation. We provide expert legal advice from our team of leading HMRC Petition Solicitors or Barristers. 

What are assessed debts, and how can they be challenged?

Assessed debts are based on HMRC’s estimated liability rather than submitted figures. You can challenge them by submitting tax returns or appealing to the First Tier Tax Tribunal (FTT). Acting early is key, as time limits for FTT appeals are strict.

What is an HMRC Demand? 

HMRC enforces tax debts through various measures for individuals and companies. Early legal advice is crucial to protect your interests. If you’ve received a statutory demand, quick action (usually within 18 days) is necessary to avoid a bankruptcy petition or a winding-up petition by HMRC. Without action, HMRC’s debt enforcement can result in a winding-up petition for companies or a bankruptcy petition for individuals.

What steps should you take if served with a demand by HMRC?

Upon receiving a demand from HMRC, carefully review it. Ensure that the demand clearly specifies the debt owed, as simply stating a figure is insufficient. 

Take advice today from our members, including qualified Tax Solicitors and Tax Barristers, that have extensive knowledge of tax laws and practical experience, including senior roles at HMRC and managing appeals against HMRC at all levels. 

What happens if you ignore HMRC’s demands?

Ignoring correspondence from HMRC can lead to further consequences. If left unanswered, HMRC may proceed with recovery and enforcement actions without additional warnings. 

Our renowned tax dispute team maintains a stellar reputation nationwide. If you or your business is facing any HMRC-related challenges, instruct us today to provide tailored legal solutions that can safeguard your interests and those of your company. 

What happens if HMRC payments are overdue?

Ignoring payments owed to HMRC typically prompts recovery actions from HMRC. It’s important for both individuals and businesses to address these matters quickly, rather than ignoring them. HMRC’s tendency to target smaller businesses persists, potentially impacting those least prepared to handle HMRC’s actions

What should you do if you dispute the sum that HMRC is demanding?

At LEXLAW, we excel in managing disputes regarding the disputed sums. We will negotiate on your behalf and ensure that your concerns are actively addressed by a member of the HMRC disputes team.

Why is simply disputing the debt with HMRC not enough?

Our experience reveals that merely writing to HMRC to dispute the debt is insufficient. You cannot assume that HMRC is actively investigating the issue on your behalf. 

Our team of experienced lawyers has a track record of delivering successful solutions. Their dedication ensures thorough review of your case, maximising its chances of success from the start when it matters most.

What challenges arise once HMRC involves its lawyers?

Once HMRC involves its in-house lawyers, it becomes challenging to revert the file to the team previously dealing with your matter. Despite this, it’s still possible to challenge HMRC’s debt, even at this stage. You should instruct professionals to correspond on your behalf to get optimal results. 

Our experienced City of London solicitors and barristers regularly assist companies facing a HMRC winding up petition; individuals served a statutory demand; or creditors owed money and considering issuing a winding up petition.

What should I do if I’ve received a Statutory Demand from HMRC?

Upon receiving a Statutory Demand from HMRC, it’s essential to act swiftly within the provided time frame. If you don’t act within the specified time limits (18 days from the date of service), you risk facing a Bankruptcy Petition (for individuals) or a Winding-Up Petition (for companies) filed against you.

What are my options?

As an individual, you have 18 days from the date of service to:

  1. Make full payment or negotiate a repayment plan with HMRC.
  2. Provide evidence to HMRC that the debt is not owed.
  3. Apply to the court to set aside the Statutory Demand, with a hearing typically scheduled to review the application.

What happens if I miss the statutory demand deadline?

If you find yourself facing a bankruptcy petition from HMRC after missing the statutory demand response deadline, we’re here to assist you. If you dispute the debt, we can help you file a notice of intention to oppose the bankruptcy order before the hearing. During the hearing, you’ll have the opportunity to defend against the bankruptcy order, which may involve submitting written witness statements. 

If you don’t dispute the debt but need time to pay, we can help you negotiate settlement terms with HMRC or request the court to adjourn the petition, allowing you more time to gather funds. 

What happens during a Court hearing for setting aside a Statutory Demand?

During a Court hearing to set aside a Statutory Demand, the Court assesses whether the demand is invalid due to genuine and substantial disputes. This process typically involves a paper review without oral evidence. It’s crucial to seek legal advice early to protect your position.

What if HMRC proceeds with a Bankruptcy Petition?

Bankruptcy is a legal procedure where an individual either voluntarily declares insolvency or is compelled by a creditor to do so, acknowledging their inability to repay existing unsecured debts.

If HMRC moves forward with a Bankruptcy Petition we can help you pursue an appeal to the First-tier Tax Tribunal (FTT) or request HMRC to postpone its recovery action. 

Can I Contest a Bankruptcy Petition?

When dealing with a bankruptcy petition, it’s crucial to get legal help to contest the petition. If you genuinely dispute the claimed debt with substantial grounds, the court may dismiss it. However, unsuccessful attempts to challenge a statutory demand won’t be reconsidered during the petition hearing. 

We’re experts in Bankruptcy Petitions, offering personalised assistance. Our services include helping with issuing a petition, challenging statutory demands, defending petitions, and handling bankruptcy annulment applications. 

What is an HMRC Winding-up petition?

An HMRC winding-up petition is a legal document that initiates proceedings for the compulsory liquidation of a company or the dissolution of a partnership. It signifies a serious step taken by HMRC when debts owed by the company or partnership are not properly addressed by its directors or partners. 

How much debt is specified in an HMRC petition?

The debt specified in an HMRC petition, like all petitions, must be at least £750, typically ranging from tens to hundreds of thousands of pounds. The owed funds to HMRC may cover various categories like unpaid VAT returns, VAT assessments, PAYE payments, Employer’s National Insurance Contributions, or outstanding corporation tax. 

How does HMRC approach winding-up petitions?

HMRC may issue a winding-up petition against a company if they believe it owes unpaid taxes and previous attempts to recover the debt have failed. This typically happens when HMRC perceives the company’s financial situation as incapable of meeting its tax obligations. 

During financial difficulties, it is common to prioritise payments to trade creditors or suppliers, often leaving tax debts at the bottom of the list. However, neglecting tax payments can lead to serious personal consequences if insolvency occurs.

Why does HMRC issue winding-up petitions?

HMRC might file a winding-up petition against a company if it has significant unpaid taxes, such as VAT, PAYE, or Corporation Tax. Despite HMRC’s previous attempts to collect the debt, including reminders and legal actions, the company has failed to pay. If HMRC believes the company is in severe financial distress, unable to meet future tax obligations, or if there has been a lack of communication from the company regarding the debt, a winding-up petition may be initiated.

What are the steps for responding to a Winding-Up Petition?

  • Pay the debt fully to avoid petition advertisement.
  • Defend with evidence and legal help in case of dispute.
  • Look into a Company Voluntary Arrangement (CVA) to stop the petition.
  • Negotiate with creditors to prevent advertisement.
  • Consider administration or voluntary liquidation for financial distress.

What can you do if HMRC proceeds with Winding-Up Petitions despite your efforts?

If HMRC continues with Winding-Up Petitions, our team of lawyers can aid in applying for a Court Injunction to restrain HMRC’s actions. This entails drafting a comprehensive Witness Statement detailing the dispute and reasons why HMRC’s actions should be stopped.

The application will proceed to a hearing before a Judge, during which both HMRC and the Company can present their arguments. If the application is unsuccessful, HMRC may proceed with winding-up proceedings against the company, aiming to liquidate it. 

What happens when HMRC advertises Winding-up Petitions?

Within seven working days of serving the Winding-Up Petition, HMRC can publish it in the London Gazette. This publication can significantly impact a company’s fate, potentially leading to its downfall. Once advertised, the company’s bank account will be frozen, obstructing any outgoing payments.

To sustain operations during this period, companies might resort to loans from directors. However, if a Winding-Up Order is issued later, these loans may become unrecoverable.

When a Winding-Up Petition is advertised, other creditors may join in. This means that even if you settle the debt with HMRC, other creditors could pursue the petition.  You can seek legal advice to prevent the advertisement of winding-up petition or seek to get a validation order

What is a Validation Order?

A validation order is a court order that permits a company to continue operating despite being served with a winding-up petition. It allows a company to continue trading or selling assets, such as property, with the understanding that these actions benefit all creditors. 

Why do I need a Validation Order? 

Validation orders not only maintain business operations but also protect company directors from personal claims, even in the event of liquidation. Obtaining a validation order enables companies to safeguard their interests and effectively navigate legal challenges.

With a proven track record, our skilled legal team offers guidance and support throughout, assisting businesses in achieving favourable outcomes amidst complex tax matters. 

How can a Validation Order help me in a winding-up petition?

A Companies Court Validation Order allows a company facing a winding-up petition to access frozen bank accounts and continue normal operations, such as paying staff and conducting business transactions. These orders are crucial because Section 127 of the Insolvency Act voids asset disposals unless approved by the Court. Depending on the situation and creditors’ best interests, a Judge can issue either a specific or general validation order.

Please Note: If you’ve received a winding-up petition, contact us right away. Acting quickly can help resolve the situation more effectively and may avoid the need for a validation order. 

What Happens If a Winding-up Order is Granted?

When a winding-up order is granted by the court, it marks a significant phase in the insolvency procedure. This action leads to the company being compelled into liquidation, with the appointment of an official receiver or insolvency practitioner as the liquidator.

Once all assets and creditors are handled, the liquidator requests the company’s dissolution from Companies House and removal from the Companies Register.

Expert UK Insolvency Lawyers

When dealing with HMRC, it’s crucial to consult a qualified solicitor. They can refer you to trusted insolvency practitioners or other professionals as needed. Our personalised guidance ensures you can make informed decisions tailored to your situation. 

If you’ve received a HMRC winding-up petition, we offer urgent help, advice, and representation. Our team of leading HMRC Petition Solicitors or Barristers provides expert legal guidance.

Please note: If you’ve received warnings about your file being passed to HM Revenue & Customs’ Solicitor’s Office or have been served a statutory demand or petition, it’s crucial to contact us as soon as possible for more effective handling of your matter. 

Experts in HMRC Winding-up Petition Defence

HMRC is the largest issuer of winding up petitions, and the resultant legal and financial difficulties can be overwhelming for businesses. However, our firm has a dedicated tax disputes team that specialises in addressing HMRC-related claims and navigating Time To Pay Arrangements, providing effective support to companies during difficult times.

We firmly believe that a combined approach is key to saving struggling businesses, and our tax dispute team is renowned throughout the country for their exceptional track record in this area. Led by a former HMRC Tax Barrister who also headed the National Tax teams of two of the ‘Big 4’ accountants, our team possesses the expertise and insight required to achieve optimal HMRC tax dispute outcomes for our clients.

If your business is facing HMRC-related challenges or threats of winding up orders, our HMRC Winding-up Petition Defence team is here to help. Contact us today to learn more about our tailored legal solutions and how we can assist in safeguarding your and your company’s interests.

Check Your Insolvency Case ✔

We analyse your winding-up petition prospects. We deliver strategic legal advice at your first meeting. We get optimal legal results. Want a first or second opinion on your case? Click below or call our lawyers in London on ☎ 02071830529


The information on this website is not legal advice; you should always obtain specific advice on the circumstances of your case. Our Winding-up Petition Solicitors & Barristers provide specialist legal advice based on decades of expertise. Click here or call +442071830529 to get in touch. For regulatory reasons we do not take on low value cases nor provide free legal advice, information or guidance and our team cannot answer questions from non-clients.

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