HMRC winding-up petitions on the rise
During the COVID-19 pandemic, the government provided millions of pounds in support to struggling businesses, which would eventually have to be paid back. Meanwhile, the closures of courts created a backlog in insolvency cases, along with restrictions on cases against debtors whose inability to pay resulted from the pandemic.
Since the temporary restrictions were lifted and the courts are catching up, HMRC is now ramping back up when it comes to chasing debt.
With a tax gap of up to £32 billion, the tax agency is under increasing pressure to collect the missing money. As a result, HMRC is filing more and more winding-up petitions against companies in serious tax debt to recover the tax from their liquidated assets.
These debt enforcement measures come at an especially bad time for most UK businesses, who are already struggling with the strain of inflation, high interest, and decreased consumer spending.
The last quarter of 2022 saw a 36% increase in companies in financial distress compared to the previous year, with winding-up petitions increasing by 131% compared to 2021. This January, compulsory liquidations resulting from winding-up petitions were up by 52% year-on-year.
With so many businesses in financial crisis, what happens if a winding-up petition is filed against you? Read on to learn more about how you could avoid this by communicating with HMRC.