A winding-up petition issued by HMRC against Oldham Athletic for an unspecified tax debt was dismissed yesterday by Judge Sally Barber in the Insolvency and Companies Court on the basis that the petition debt had been cleared. The judge considered the application at a virtual hearing in the specialist Insolvency and Companies Court.
While the Oldham Athletic debt does not seem to have been disputed and was paid prior to the petition hearing, it still remains increasingly common for HMRC to use winding-up petitions to recover unpaid tax debts, even though it is well-established case law that winding-up petitions should not be used to pressure a debtor to pay an unpaid tax debt.
Restriction on statutory demands and winding-up petitions
The Corporate Insolvency and Governance Bill proposes that on presenting petitions from 27 April 2020 there may be a prohibition on issuing a statutory demand or presenting a winding-up petition in the following circumstances:
- If the creditor relies on non-payment in relation to a statutory demand served from 1 March 2020;
- Where the petitioner relies upon the grounds in section 123(1)(a) to (e) of the Insolvency Act 1986, unless the petitioner has reasonable grounds for believing that COVID-19 has not had a financial effect on the company or the facts relied upon in founding the petition would have arisen regardless;
- If the petitioner relies on the ground that the company would not have been able to pay the debt as it fell due regardless of COVID-19.
All winding up petitions must contain a statement where the petitioner considers that the relevant the COVID 19 condition is met. Where applicable, if petitions are presented on or after 27 April 2020 before the force of this legislation and if the COVID-19 condition is not met, the Court may restore the position make an order that would have been made even if the petition had not been presented.
How can companies oppose a winding-up petition from HMRC?
If your company is concerned about a winding-up petition from HMRC, your company can challenge that petition on the following grounds:
- The Company has been unable to pay the debt due to COVID-19 reasons (e.g. the Company has been financially impacted by COVID-19);
- The debt alleged in the statutory demand or petition to be owing is genuinely disputed on substantial grounds by your company;
- Your company has a genuine right of set-off against the creditor (i.e. HMRC) that exceeds the amount claimed in the statutory demand; or
- In certain other limited circumstances (for example such as jurisdiction, company likely to become insolvent, technical or procedural error or delay).
In order to oppose a winding-up petition, you would need to file a witness statement in opposition with the Court no fewer than five business days before the date when the petition will be heard by the Court (rule 7.16 of the Insolvency (England and Wales) Rules 2016). You would also need to provide a copy of that witness statement to the petitioning creditor at least five business days before the hearing.
Your company is entitled to appear at the petition hearing and to oppose the making of a winding-up order. It is usual for companies to instruct solicitors and/or barristers to appear on their behalf at the petition hearing.
If a company chooses not to instruct lawyers, then any director can appear at the hearing on the company’s behalf. However, other agents of the company (such as accountants) are not entitled to appear on the company’s behalf.
How we can help your company
As a leading law firm with a track record of success, you can be assured that your matter is in safe hands. Our success rate is a result of the dedication of our lawyers who will diligently review your matter so it has the best possible chance of success from the outset when it matters the most.
Why should you instruct a specialist insolvency lawyer at the winding up petition hearing?
The rules surrounding insolvency are technical and it is unlikely that a someone not versed in personal insolvency laws will achieve a successful outcome. Winding up particularly and insolvency in general is a niche practice area – indeed many solicitors in general practice will rarely have experience in this discipline.
Do not underestimate the severe consequences that winding up a company entails. It is likely that seeking the advice of a specialist insolvency lawyer will be of far more benefit to you than ignoring impending proceedings or seeking to conduct the litigation yourself as a layman.
Not based in London? We provide nationwide representation
That does not matter, we will represent you no matter where you are based in England or Wales.
If you contact us through our contact form, by email or by phone, one of our winding up petition team members will contact you by phone to discuss your matter and assess whether we can help you.
If we can, we will arrange a conference with a senior member of our winding up petition team. This meeting will take place either in person or using our telephone conference facilities or via Skype if you prefer. Therefore, no matter where you are based in England or Wales we can represent you.
Instruct Specialist Insolvency Lawyers
We provide a no cost initial case review to establish whether or not we can help you. We are a specialist City of London law firm made up of Solicitors & Barristers and based in the Middle Temple Inn of Court adjacent to the Royal Courts of Justice. We are experts in dealing with matters surrounding insolvency in particular issues. Our team have unparalleled experience at serving statutory demands, negotiating with debtors/creditors, setting aside statutory demands and both issuing and defending winding up petitions vigorously at the Royal Courts of Justice (Rolls Building), or the relevant High Court District Registry or County Court with jurisdiction under the Insolvency Rules
Want legal advice on the merits of your case?
Our simple enquiry form goes immediately to our insolvency team in Middle Temple, London. Call us on +442071830529 from 9am-6pm.