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This is not a wind up - HMRC and creditors are ready to act this April

This is not a wind up - HMRC and creditors are ready to act this April

Friday might be April Fool’s Day but the government is not fooling around when it comes to recovering outstanding tax arrears and neither will other creditors when the last of the insolvency restrictions are finally removed on Friday April 1st.  The Corporate Insolvency and Governance Act 2020 (CIGA) was introduced to bring in various temporary […]
winding up petition

Friday might be April Fool’s Day but the government is not fooling around when it comes to recovering outstanding tax arrears and neither will other creditors when the last of the insolvency restrictions are finally removed on Friday April 1st. 

The Corporate Insolvency and Governance Act 2020 (CIGA) was introduced to bring in various temporary measures to help protect companies affected by lockdown restrictions during the pandemic.

Some of these such as the furlough scheme expired between June and September 2021 while others such as restrictions on issuing winding up petitions against companies (with some caveats) was extended until 31 March 2022. 

In a new statement, the Insolvency Service has confirmed that this one remaining insolvency restriction will not be extended any further, allowing the insolvency regime to return to its full pre-pandemic operation and meaning that creditors and companies with outstanding debts will be looking at Friday’s date with differing expectations and emotions. 


CIGA was a necessary response during the pandemic. It was introduced when it was clear that the damage to businesses would be greater than first anticipated and that subsequent lockdowns would also be required, to attempt to mitigate the disruption these would cause otherwise viable and profitable companies. 

One temporary measure was the relaxation of wrongful trading criteria to reduce the risk of personal liability for directors who may have inadvertently traded while insolvent during the pandemic.

While it wouldn’t stop directors being liable for wrongful trading within the relevant period, or being pursued for breaching their statutory duties, it did artificially restrain the expected number of insolvencies. Directors would be more likely to continue trading rather than feel obliged to liquidate their business even if it had a chance of reasonably recovering.

The other big temporary change which is being removed is the final restrictions on serving statutory demands and winding up petitions for debts related to Covid-19. 

Creditors were still able to bring a winding up petition if total debts exceeded £10,000 and if the company receiving the demand hadn’t come up with reasonable proposals to repay the debt either in whole or in instalments within a 21 day period.  

From April 1, we can expect to see an increase in the number of winding up petitions being sought for debts of £750 or over owed from as early as March 2020. 

One of the few remaining caveats on winding up petitions is covered under another piece of legislation - the Commercial Rent (Coronavirus) Bill which came into force on March 25 2022. 

This bill prohibits winding up petitions being presented against businesses where the amount owed is overdue rent that was accrued during a period of forced closure as a result of the pandemic. 

The alternatives for the landlord will be to go through binding arbitration with the tenant to find a solution or if no arbitration is entered into then six months after the Bill was passed. 

HM Treasury estimates that UK rent arrears stands at approximately £9 billion so while landlords will be keen to recoup as much as possible, tenants still have room to manoeuvre and seek a solution in the next six months. 


One other measure introduced by CIGA which is now a permanent addition to the insolvency practitioner’s toolbox is the insolvency moratorium procedure

The moratorium allows valuable breathing space for distressed businesses by allowing a payment holiday for pre-moratorium debts.  

This doesn’t include wages, salaries or certain other liabilities involving financial services but does provide protection against formal insolvency or other recovery proceedings being launched. 

The purpose of the moratorium is to give the businesses and insolvency professionals working with them time to fully explore all available restructuring and rescue options without having to worry about an immediate threat of a winding up petition or similar demand. 

While there has so far been less than 30 cases where a moratorium has been used effectively, now all other restrictions have been removed it can have some “breathing space” to come into its own as a valuable option to help a company restructure solvently and provide creditors with a greater ultimate benefit and return on their investments than any insolvency outcome. 

Chris Horner, insolvency director with BusinessRescueExpert said: “It will be interesting to see how the insolvency moratorium evolves and is used in the coming weeks and months now there will be more scope and opportunity to put it into practice. 

“One key point to make is that if a moratorium is able to do anything apart from delaying an inevitable liquidation it has to be used simultaneously with other actions to positively impact the company’s prospects or profits.  

“This could include refinancing, sale of part of the business or assets or even a CVA. 

“Otherwise it would be detrimental to creditors whose legal rights would be put on hold for the duration of the moratorium for no good reason and would make them less likely to support their use in future.

“What is clear from statements from MPs and anecdotal evidence is that HMRC will be very aggressive in its attempts to recoup outstanding debt as soon as they are able. 

“It’s true that total outstanding debt has come down from £69.5 billion in Sept 2020 to just over £39.4 billion in December 2021 but the total debt that is available for them to pursue has also risen.

“This is debt that isn’t subject to any Time to Pay or other insolvency arrangements or that hasn’t been deferred due to the pandemic and at £32.5 billion is at its highest absolute level and also the highest percentage of total debt (82.5%) that is available to be targeted for recovery action by HMRC from Friday.”


Two years is a long time for any business and several new business owners and directors won’t have experienced dealing with HMRC under “normal” circumstances. 

We have and can tell them that this is the most tenacious and committed creditor they would ever encounter.  

They will also be aware of the darkening clouds over the country’s economy and know that there will be no better way of demonstrating their effectiveness and usefulness than bringing in as much income to the Treasury as they can. 

This means the window for any business with outstanding HMRC or other debts to act before creditors do is small and continuing to get smaller every day. 

We will continue to offer a free virtual consultation for any director or business owner that is worried about their business’ immediate financial situation, or is worried about receiving a winding up petition or actually has had notification of one against them. 

After establishing what the situation is, we’ll be able to provide them with some clear options about what they can do next but critically the sooner they act, the more they will generally have to choose from. 

If you suspect that your creditors are about to make their move - shouldn’t you make yours first?

Business Rescue Expert is part of Robson Scott Associates Limited, a limited company registered in England and Wales No. 05331812, a leading independent insolvency practice, specialising in business rescue advice. The company holds professional indemnity insurance and complies with the EU Services Directive. Christopher Horner (IP no 16150) is licenced by the Insolvency Practitioners Association

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