Four year high for Winding Up Orders
During the previous 12 month period until the end of September 2019, the number of HMRC issued winding-up orders was 4,308 – which was an annual increase of 6%.
This is the highest total recorded in the previous four years.
A winding-up order can be brought by any creditor that’s owed a minimum of £750 although HMRC are the most likely to bring one as it covers outstanding debts including PAYE, National Insurance Contributions and VAT.
If a company is wound-up then they are formally liquidated and any funds raised used to pay back creditors. Directors will lose control of the company to either the official receiver or a licenced insolvency practitioner and all staff will be automatically made redundant.
HMRC may offer a Time to Pay scheme which offers companies the opportunity to pay off their debts over a longer period rather than as a lump sum but if these arrangements are broken then HMRC will usually look to claim the outstanding amount ASAP.
There could also be additional difficulties for a business in HMRC’s bad books as banks could potentially freeze the account of a company subject to a winding-up order which would effectively cease all trading.
We’ve previously written about proposed new legislation due to become law in April this year that will give HMRC enhanced creditor status. This will enable HMRC to claim repayment for outstanding debts including PAYE, National Insurance Contributions and VAT ahead of floating charge holders and other unsecured creditors.
An HMRC spokesperson said: “We only initiate winding-up action as a last resort, where we believe this is the best way to protect both the interests of other taxpayers and creditors.
“Anyone who anticipates payment problems should call us as early as possible as we have an excellent track record for supporting those with genuine problems.
“We will always work with taxpayers to find the best possible solution, based on their specific financial circumstances – such as spreading tax payments over time through a Time to Pay arrangement”.
Inaction is unlikely to be a successful strategy so if you’ve been contacted by HMRC or think they might be in touch with you soon then contact us as soon as you can. It may be tempting to bury your head in the sand, but taking more direct action will generally improve the overall outcome for everyone.
One of our experienced expert advisors will go through your company’s situation and give you the most practical and effective strategy to satisfy HMRC and let your company move forward, free from potentially terminal consequences.