Revenue Revving Up?

Over the past year, HM Revenue & Customs (HMRC) has notably intensified its efforts to recover outstanding tax debts by increasing the issuance of winding-up petitions against companies.

This marks a significant shift from the more lenient approach observed during the COVID-19 pandemic, reflecting HMRC's renewed commitment to enforcing tax compliance.

Is HMRC escalating Winding-Up Petitions?

In July 2023, HMRC's enforcement actions reached a notable peak, with 348 winding-up orders granted based on its petitions — the highest number since before the pandemic. 

The trend continued into 2024, with HMRC maintaining an assertive stance. For instance, in April 2024, there was a 44% increase in winding-up petitions compared to April 2023, indicating a consistent effort to compel debt settlement. 

Whilst specific data on the number of winding up petitions issued in 2025 has not been released at the time of writing, the R&I team at Higgs LLP has seen a significant number of instructions to attend the hearings of HMRC petitions since the start of this year, suggesting that the numbers of HMRC petitions continue to rise.

This surge underscores HMRC's determination to address the substantial increase in tax debt accrued during the pandemic, which had more than doubled compared to pre-lockdown levels.

Willingness to negotiate?

While HMRC does not publicly disclose specific policies regarding leniency in granting adjournments for these petitions, courts may consider adjournments under certain circumstances if:

1. A company demonstrates that it is in the process of securing funds to settle the debt;

2. A company presents draft CVA proposals indicating a structured plan to repay creditors over time;

3. A company intends to appoint an Administrator – serving a notice of intention to appoint an administrator creates a moratorium, temporarily halting legal actions like winding-up petitions or if the petition has already been filed an application can be made to court for an Administration Order provided it can be shown the administration will achieve a better outcome for creditors than a compulsory winding up;

4. There is a genuine dispute regarding the validity or amount of the debt, the court may adjourn the petition to allow for resolution;

5. There has been a procedural defect in the filing or serving of the petition; or

6. It is the first hearing of the petition, and the company can demonstrate means to pay before the next hearing.

It's important to note that while HMRC may not oppose adjournments in these scenarios, the decision ultimately rests with the court, which will consider the company's specific circumstances and the viability of proposed repayment plans.

What does this mean for you?

For directors and business owners the willingness of HMRC to agree to adjournments shows a genuine desire on the part of HMRC to avoid the making of a winding up order. This gives directors an opportunity to try and raise funds or look at alternative rescue options provided they act quickly and get legal advice.

For insolvency practitioners the surge in HMRC petitions creates opportunities to support businesses with rescue options. Early conversations with directors and their accountants will help to raise awareness on how to avoid petitions and what to do if one should land.

By Lauren Hartigan-Pritchard, Higgs LLP