One of the most severe actions a creditor can possibly take against a business, a winding up petition can easily turn into a winding up order, and lead to the quick closure of a business if not handled appropriately and swiftly.
This is why understanding how to stop a winding up petition, what one is, and what actions you can take if you receive it, is pivotal for the protection of your firm’s future.

What Does a Winding Up Petition Mean?

Before we explain how to stop a winding up petition, it is important to detail what one actually is. A winding up petition is a way for creditors to try to recoup lost money owed to them. It is usually seen as a last resort and is not handed out lightly, due to the severe repercussions it can lead to.
Creditors can obtain a winding up petition via the court system when they are owed as little as £750. If somebody can prove that they are owed a certain amount of money and have been unable to retrieve it from another party for a prolonged period of time, the court may issue a winding up petition to request a company repay the debt, in addition to the legal fees. The repayment will have to take place within a certain period of time, or else the debtors’ company will be forced to liquidate, and the recovered proceeds will be used to pay back the debt.

What Should I Do if I Receive a Winding Up Petition?

In most cases a winding up petition will act as a huge red flag that your company is not operating as it should, and needs to act swiftly to avoid liquidation. This often causes a volatile, stressful time within the business, with people not knowing what to do. However, there are things you can do to avoid this.

A winding up petition isn’t going to just go away. If you ignore it, your business will be shuttered. The only thing you can do to save your company is to act quickly and to follow the correct course of action.
Once a petition is served you have seven days before it is made public and posted in the London Gazette, sanctions will follow. This means that you have up to seven days to take stock and re-adjust your business to repay the debt.
The best way to stop the petition being placed in The Gazette would be to seek professional help. An experienced tax professional would be able to come in, assess the situation, and right the ship to stave off liquidation and find a way to repay the debtor.

Can I Stop a Winding Up Petition?

Being handed a winding up petition can, for some businesses, set the ball into motion towards liquidation. but it doesn’t have to. If you are prepared, organised, and informed, you can overcome a tricky situation and come out the other side unscathed, and hopefully more responsible.
There are a few options open to you and things to consider that can buy you more time, make the debt more affordable, and possibly even make it go away entirely.

Communication is Key

The best way to go about things if you’re handed a winding up petition is NOT to isolate yourself from your debtor. You will want to keep an open channel of communication if possible. This will act as a way for you to show your debtor that you are taking the situation seriously and may make them more amenable to finding a compromise to suit both parties.

Pay the Debt Upfront

The simple solution. If you have the means to do so, paying off the debt owed in full (including legal fees) within the allocated period of time is the easiest way of making the petition go away.
If you do it quickly, the petition will be removed from the court and it will not be reported in the London Gazette. However, paying upfront doesn’t always guarantee you’re in the clear.
If the petition is not removed from the court and another company feels that they are also owed money from your business, it could be possible for them to take over the petition, regardless of if you’ve paid off the original debt.
This is called a ‘change of carriage’ and would require you to also repay your outstanding debt to this second company in addition to the first, this process can be done by multiple companies as long as they each have legitimate grievances.

Try to Find an Agreement

If you make it clear to your debtor that you are working as hard as you can to repay the money owed, but are struggling to get it all by the deadline, it may be possible to come to a form of agreement on an informal payment plan.

The most common form of restructuring a business is administration, it grants businesses temporary protection from creditors to come up with a solution to the current predicament.
It should also be remembered that restructuring isn’t a ‘break glass in case of emergency’ solution though. Administration is not an option for any company whose debt has been advertised in the Gazette, and it will only be granted if it is believed that administration could legitimately benefit creditors, and increase the chance of them receiving their money.

Negotiate Formal Payment Terms

A common method of stopping winding up petitions progressing is to formulate a formal payment plan. Company Voluntary Agreements (CVA) were introduced by the UK government to support businesses wanting to repay debts and avoid liquidation.
If the creditor agrees to a CVA your company will be permitted to continue trading to earn money, allowing you to repay the debt. The repayments typically take place once monthly until the debt is paid off, this can take years if the debt accrued is high enough.
For a CVA to be a viable solution, you will need to propose it within the deadline before the debt is advertised in the Gazette, after this point you will be forced to find an alternative solution.
If you are in debt to HMRC, another potential course of action is to agree a Time to Pay Arrangement. This is a method of spreading your payments over a longer period of time to make them more affordable.

Administration

Restructuring a business can be a way for you to re-assess the options ahead and formulate a strategy to tackle the new reality of the business.
The most common form of restructuring a business is administration, it grants businesses temporary protection from creditors to come up with a solution to the current predicament.
It should also be remembered that restructuring isn’t a ‘break glass in case of emergency’ solution though. Administration is not an option for any company whose debt has been advertised in the Gazette, and it will only be granted if it is believed that administration could legitimately benefit creditors, and increase the chance of them receiving their money.

Dispute the Debt

The final, and rarest solution to stopping a winding up petition is to dispute. If you believe that the ordering of a winding up petition is unjust, it may be possible to stop it by receiving an injunction.
HMRC are the organisation responsible for calculating and assessing the situation to provide evidence of the legitimacy of the application for a winding up petition, and they very rarely make errors. But in all aspects of life, mistakes can happen.
So if you have received a winding up petition that you disagree with, and you believe that you can provide proper evidence to support your view, you could have the petition dropped completely.
If you believe the winding up petition to be unjust, seek specialist advice. They will be able to assess the situation without bias and establish whether you truly have a case to dispute the debt.

How Can Tax Debts Help?

A winding up petition could be a fatal blow to your company if it isn’t handled thoroughly, responsibly, and efficiently.
For further expert advice on how to stop a winding up petition, and find out what Tax Debts can do to help you, contact a member of our expert team today.

The 1st October 2021 marked the date a creditor can present a compulsory winding up petition without the restrictions put upon them by the pandemic era.
For the last 18 months, companies in financial difficulty were given a reprieve, as creditors were not able to use a winding up petition as the primary means of regaining lost money. That honeymoon period is now over.
It is now essential for businesses to balance their books and ensure they are able to meet all of their obligations. Should this not be possible, their next port of call should be to seek expert guidance on how to manage their finances at the earliest opportunity. Leave it too late, and the company’s future could be at risk.
Before we continue, however, it is important to point out that business landlords are still prohibited from serving a winding up petition until March 2022 — making them the only creditor unable to do so. That being said, if you are in arrears with your landlords, it would still be preferable to sort out your finances before this protection is removed.

Why was the Service of a Winding Up Petition Paused?

The service of winding up petitions was paused in order to provide debt-laden businesses with a modicum of breathing room. It was intended, along with COVID-19 financial support provided by the government, to stop the number of insolvencies in the UK from skyrocketing, thus potentially leaving a huge dent in the nation’s economy for years to come.

The pausing of winding up petitions was introduced in June 2020 when the government unveiled the Corporate Insolvency and Governance Act 2020, one of the most significant alterations to insolvency law the country has seen in decades.
It is believed that this pause to winding up petitions did, ultimately, serve its purpose. Monthly insolvency figures provided by the government back in July 2021 showed that the number of insolvent companies was around 25% lower than at the same time in 2019.
Restrictions against winding up petitions were initially only expected to last until 31st December 2020 before being extended multiple times; to 31st March 2021, then the 30th June, and finally to October.
With businesses continuing to reopen their doors and the nation’s economy slowly showing signs of healing, it was clear that the time had come for further debt accountability to return — and that time is now.

What is the Threshold for a Winding Up Petition?

As of October 1st 2021 it is once again possible to present a company with a compulsory winding up petition on the strict basis that they meet a series of conditions. These stem from the total amount owed, a time frame allocated for debtors to pay off the debt, the origin of the debt, and more.
A creditor will need to meet the following conditions in order to present a winding up petition:

1. The debt owed must be for a liquidated sum of money, and can under no circumstances be rent or another payment that will be owed under a business’s tenancy agreement.
2. Creditors must provide written notice affording the company 21 days before any presentation of a petition. This time is intended for the company presented with the proposal to formulate a plan on how they intend to repay the debt.
3. The 21 days period has passed since notice was given and the company has not made a proposal deemed satisfactory to creditors.
4. The incumbent debt must stand at a minimum of £10,000. Combined creditor debts can be raised under one petition, and this total sum may exceed this figure.

Winding Up Petition Consequences

There are a variety of possible consequences of a winding up petition that can leave a lasting impact on a business. The most severe consequences can be the significant losses to company finances or reputation, or compulsory liquidation of the business.

A selection of some the core consequences of a winding up petition are as follows:

• Limited Time: A business handed a winding up petition is likely to only have between 4-8 weeks before its fate is decided in court. This means that time is of the essence when it comes to saving the business, putting everybody under immense pressure.
• Assets frozen: A winding up petition being advertised in the London Gazette will lead to all company bank accounts being frozen, stopping any payments in or out.
• Change of Carriage: A change of carriage is a scenario where another party with a legitimate grievance against the business joins in the petition, leading to the business being forced to pay back two or more debtors at the same time.
• Reputational Damage: Clients and consumers can see a winding up petition as a sign that a business is insecure or even untrustworthy and can opt to avoid them.
• Financial Damage: In addition to paying back creditors, businesses can accrue significant financial hits as a result of legal expenses.

For more information about the consequences of a compulsory winding up petition, please read our blog on the subject.
Liquidation of your business represents a disaster for any director or owner, it is the loss of everything that they have worked towards building.
If you do not act quickly against a compulsory winding up petition with a clear, concise plan to turn the tide in your favour and secure a more sustainable future, it could spell the end. Seeking specialist advice on what you can do to aid you in protecting the future of your business.

Do You Need Winding Up Petition Help?

TaxDebts boast a world class team with decades of experience in supporting businesses in compulsory winding up petition cases. We know the process inside and out and can guarantee you the support and knowledge you need to help guide you through what can be a testing time for the company, and for everybody involved in its running and operation.
Receiving a winding up petition can spell disaster for the prolonged future of a business, particularly if not dealt with appropriately and efficiently.
With the brief pause to winding up petitions coming to an end post-pandemic, it is key that all businesses get their affairs in order so they can make sure that they are totally protected against any eventuality.
For further advice on how you can stop a winding up petition, and to discover more about what TaxDebts can do to help, contact a member of our team today

Businesses across the UK are facing serious financial difficulties. This is why the prospect of negotiating Time to Pay with HMRC and receiving that added breathing room is such an attractive option for many.
As a business owner it is important that you understand the subtleties of Time to Pay (TTP) arrangements; if you qualify, how to apply, what professional guidance can do for the success of your application, and more.

What is a HMRC Time to Pay Arrangement?

A HMRC Time to Pay Arrangement is an agreement made between a struggling business and the tax office. Time to Pay affords the company up to 12 months extra to repay their debts. This allows businesses additional breathing room against the pressure that can quickly build and overwhelm, particularly when faced with HMRC arrears and the bills are totting up.
Businesses taking part in the TTP scheme can spread their debt repayment over a manageable period of time — thus improving cash flow, and guaranteeing that there is more money available for outgoings. Additionally, the more proactive you are in seeking out a TTP, the less likely it is that HMRC will take enforcement action against you.
Failure to arrange a deal with HMRC could lead to them issuing a winding up petition against your business. This will result in your company being forced into compulsory liquidation; all assets will be sold off, and you will lose everything you have built.

How to Make a Time to Pay Application

The purpose of Time to Pay is for HMRC to assist businesses faced with an unforeseen/unavoidable financial issue. However, the application hinges on HMRC being satisfied that the firm is indeed struggling and not just attempting to avoid meeting their tax liabilities. Remain patient in the application process and your business is sure to benefit in the long run.

The most important thing you must do when making a Time to Pay arrangement is to be as proactive as possible. If HMRC reaches out to you about late payments it is already too late and you will have missed your window for support. HMRC wants to help struggling businesses, but to do so they must show the willingness to initiate the contact, to seek help.

Do I qualify for Time to Pay?

Before making an application, it is important that you are clear on whether you qualify in the first place. When considering eligibility for Time to Pay HMRC will consider a number of factors, these include:

• How consistently your business has complied with all tax rules. Any previous late filing of taxes/fines received will show that your company is unreliable, and should not be trusted.
• Have you been proactive in seeking out an agreement?
• What previous experience do you have with TTP arrangements? A business that has taken out an arrangement before will not be disqualified, but will likely be put under additional scrutiny as to why they are applying again.
• How heavily your business was affected by the COVID-19 pandemic.
• How high risk your business is. HMRC are unlikely to offer payment plans to any company considered to be ‘high risk’.

For more information on whether you would qualify for Time to Pay contact TaxDebts today.

Applying for Time to Pay with HMRC

When considering a Time to Pay application, HMRC prefers to be contacted over the phone for efficiency of data collation. You can contact them directly at 0300 200 3835. However, before you pick up the phone it is recommended that you get in touch with a business tax specialist to ensure that your case is as strong as possible.
An insolvency practitioner will be able to assess your specific situation and determine the viability of your application, and the strength of your case. Some factors and information that will need to be considered are:

• How realistic are the terms of the proposal, will the business actually be able to afford to repay?
• What company cash flow figures and forecasts are available to help support the viability of the proposal?
• Are there provisions in place to cut company costs to help adhere to repayment?
• How close to tax arrears are you? The earlier the financial issue is caught, the stronger the case.

Negotiating Time to Pay with HMRC can be a difficult and complicated process. This is why some parties prefer to seek out the assistance of an insolvency practitioner — to ensure that you get the best possible result.

What if HMRC Refuse Time to Pay?

If HMRC refuses your application for a Time to Pay arrangement, it is important if you have not done so already, to seek expert assistance as soon as possible. A licensed insolvency practitioner can conduct an audit of your finances — they can then approach HMRC again with new evidence to show that the business is capable of repaying its debts.

If your application is refused, it is also possible that your expert will suggest a Company Voluntary Arrangement. A CVA is an insolvency tool primarily used to restructure a business; including all debts in order to correct any financial difficulties. The time-scale for a CVA typically ranges between 3-5 years.
A CVA can be a useful tool to allow a business to reshape and repay its debts with the aim of remaining in business. It is also possible that the threat of a CVA is enough to force HMRC to consider accepting the initial Time to Pay arrangement. This is because an agreement for repayment in 12 months suits HMRC much more than a more general timescale of 3-5 years. It is also possible during a CVA that the business becomes insolvent, potentially leaving HMRC with nothing to recover.

Need Help with a HMRC Time to Pay Agreement?

Negotiating a Time to Pay Agreement with HMRC can be a difficult time for any business owner. The process can be complicated, and the situation surrounding the application can be stressful. Before you consider picking up the phone and contacting HMRC. speak to Tax Debts, we can undertake a thorough review of your specific circumstance, and outline what options are available to you.
Tax Debts have a very strong working relationship with HMRC, an in-depth knowledge of exactly how it operates, and can use this expertise for your benefit to negotiate with HMRC on your behalf, to ensure the best possible result.
For further help with a HMRC Time to Pay agreement, contact a member of our team today.

Receiving a statutory demand should be considered a serious red-flag for you and your business. It is a clear sign that your company could be headed for serious financial issues that will need to be addressed.
As a business owner it is important that you know how to respond to a statutory demand, understand the seriousness of the situation, what options are open to you, and that you seek professional guidance as soon as possible.

What is a Statutory Demand for Payment?

A statutory demand for payment is a written, formal demand from a creditor for a debt to be repaid. It can act as a warning from your creditors that they intend to begin official court proceedings should any withstanding debts not be paid back, or in the event that a suitable agreement for both parties cannot be agreed.
The issuing of a statutory demand is the first step towards a creditor taking legal action to force a debtor to repay what they are owed.
Understanding how to respond to a statutory demand is key. A statutory demand can, in the right circumstance, be used as grounds for the presentation of a court petition for a winding up/bankruptcy order. This is because, should a debtor fail to comply and pay a statutory demand within the allotted time frame, it can be deemed as clear evidence of their inability to pay back accrued debts.

How Long is a Statutory Demand Valid For?

Typically, a statutory demand is intended to force debtors to pay back what they owe within a set 21 day period. They are, however, valid for up to four months. This allows creditors a short window of time in which to escalate the situation, by pursuing bankruptcy or winding up orders should they wish.

If a creditor wishes to take further action on a statutory demand that is older than four weeks they would need express permission from the court. Considering that in most cases statutory demand application is a final attempt for a creditor to receive payment, it is highly likely that they will push ahead with further action should you not respond within a reasonable amount of time. It is therefore imperative that you seek specialist assistance to help you deal with the situation at hand at the earliest opportunity.

Does a Statutory Demand Affect Credit Rating?

Should a debtor find themselves in the position of being able to comply with, and pay a statutory demand, their credit score will remain unaffected. However, a debtor unable to pay a statutory demand, that is later declared bankrupt by an official receiver, will have their inability to pay the statutory demand recorded.
The possible impact of being unable to repay a statutory demand on your credit file can be significant, and can leave a lasting impact on your life well after the initial demand is settled. Therefore it is important that you seek out expert guidance to ensure that you are protected in both the short and long-term.

How to Deal with a Statutory Demand

There are three common methods used when dealing with a statutory demand. These range from compliance, mounting a challenge, or doing nothing and hoping the problem disappears. Unfortunately, the issue disappearing completely is highly unlikely to happen in a majority of cases, so it is important to tackle the issue head on and get everything sorted as soon as possible.
Here are the three potential methods of dealing with a statutory demand in a bit more detail:

Do Nothing

An incredibly dangerous tactic to take when faced with statutory demands. Opting to do nothing is not recommended, and there is a very good chance it could lead to bankruptcy.
It is not guaranteed that a creditor will opt to look for bankruptcy following the issuing of a statutory demand, but it can be seen as a statement of intent in many cases.
Bankruptcy can be devastating to a business, its employees, and everybody associated with it, so it is best to not take any unnecessary risks.

Comply with the Statutory Demand

Complying with the statutory demand entails either paying it off in its entirety, or making a deal with the creditor that allows you to pay the demand back in instalments, gives you further time to raise funds, or you can make an agreement on alternative methods of payment.

Complying with a statutory demand is your best course of action, provided you accept you owe the debt. It can be done in three ways:

• Paying the debt in full
• Agreeing a settlement offer
• Arranging an alternative method of payment

Paying the debt in full should, of course, be the preferred option for all parties. It resolves the dispute in as painless a manner as possible and acts to put a bow around the entire issue. It is not uncommon for creditors to be amenable to a settlement such as a payment schedule that suits all parties. It is often preferred to find an agreement for payment in instalments, or for an extension, than having to escalate the situation further.
Should paying back the full amount not be viable, there are still some options open to you. It is possible to attempt to reach a settlement offer, which traditionally entails a creditor accepting a lesser sum of money up front in one lump sum. Should a creditor agree to such a deal, the remainder of the debt would be written off.
It is also possible to secure the debt against an asset, more commonly property. However, this course of action can be incredibly risky so it is recommended you seek professional advice beforehand.

Apply to Set Aside the Statutory Demand

If you believe there is cause that the statutory demand is invalid, it is possible to apply to the court to have it set aside.
If you are living and operating in England and Wales you will need to fill out two forms in order to prove the invalidity of the initial demand. These will be the application to set aside the statutory demand, and a witness statement that supports your case.
Anybody wishing to apply to have their statutory demands set aside in Scotland, Northern Ireland, or anywhere else should double check the process where they are.
Proper grounds to have a statutory demand set aside are:

• The initial debt is disputed
• The amount due is being counterclaimed
• The demand amount stands at under £750 for a business, or under £5000 for an individual
• The statutory demand was served or prepared improperly

Should you wish to apply to set aside a statutory demand, it is important that you have proper grounds (be it one of the reasons above, or another). Fraudulent applications for any reason could result in the court issuing you with a cost order that will only increase the debt further.
Once an application to have the statutory demand set aside is officially submitted, a hearing will take place to determine the validity of the claim. The creditor will, during the court of the hearing, be granted an opportunity to prove that their demand is valid.

What if I Can’t Pay a Statutory Demand?

If you have exhausted all of the options available to you in order to have the statutory demand set aside, or amended in some way, and you are still unable to pay the debt, it is vital that you seek out expert advice as soon as possible. Options available to you include:

• Creditors Voluntary Liquidation
• Administration
• Company Voluntary Agreement

The options open to a debtor can become more and more limited by the day during the process, particularly if a winding up petition is issued. Therefore, you should seek advice as soon as you can to give your case the best chance of success, and increase the prospects for your business and its long-term future.

Need Help with Statutory Demands?

Working out how to respond to a statutory demand can be a complicated time in any business. It is important that you keep on top of the situation and tackle it head on, in as efficient and clear a manner as possible.
The TaxDebts team has a wealth of knowledge and expertise with helping businesses and individuals tackle statutory demands, gained from years of experience in the area.
That is what makes us so confident that we are perfectly placed to help. We promise to provide a first-class service and will always act with your best interests at heart.
For further advice on how you can respond to a statutory demand, and to discover more about what TaxDebts can do to help, contact a member of our team today.

A winding up petition is a clear indicator that your business is operating inefficiently or inappropriately. It is the clearest indicator that a business is in financial difficulty, and can be the beginning of a chain of events that can lead to a company being liquidated.
Once it has been initiated, the consequences of a winding up petition can often be serious and unavoidable. They can have a lasting, long-term effect on the future of any business.
The end-goal of a winding up petition if not handled correctly can be a winding up order, which can lead to a business being forcibly liquidated.
To give yourself the optimal opportunity to avoid this possibility, it is vital that you recognise the process of a winding up petition, and get a clear understanding of the possible consequences that could arise from it.

What is a Petition to Wind Up a Company?

A petition to wind up a company is a sign that your business is in for a tough time, and likely has been for a while. It is a method used by creditors to attempt to recoup any money owed to them after several failed attempts.

Applying for a winding up petition is generally seen as a last resort, and the request will not be approved unless absolutely necessary due to the possible severe repercussions for the business and all of its employees.
The consequences of a winding up petition can leave a lasting mark on your business, and if appropriate measures are not taken, can ultimately lead to the liquidation of your business.
However, this doesn’t have to be the case. If you find yourself in the position of receiving a winding up petition, not all is lost. There are options available to you that can help you avoid the worst coming to fruition.

Winding Up Petition Consequences

There are several potential consequences of a winding up petition that can affect your business in a multitude of ways. The most severe of these is the compulsory liquidation of your firm and the loss of everything you have worked so hard to build.
However, it is important to note that the serving of a winding up petition does not automatically spell disaster for your company. If you act quickly, you can give yourself the best possible chance of turning things around. This is why seeking specialist advice at your earliest opportunity is essential.

Other Creditors May Get Involved

Once the winding up petition is advertised in the London Gazette, it is possible that any other businesses who feel that they may also have a case against your firm will be able to join with the case currently ongoing, even if you are in the process of paying off the first creditor.
This is called a ‘change of carriage’ and in this scenario you are required to also pay off the outstanding debt to the second company as well as the first.
A change of carriage is not limited only to one company, if there are multiple possible claimants then they can all join the petition. This scenario can quickly snowball if a business owner is not careful.

Limited Time to Rescue Company

It is estimated that there are approximately 4-8 weeks between a company receiving a winding up petition, and finding out its final fate in court.
This means that once the petition is accepted by the court, you have a matter of weeks to attempt to save your business. Immediately putting any company director under immediate pressure to attempt to repay the debt.
Fortunately there are a few options open to you that can help to keep your business afloat, and even put you in a better place for the future.

Frozen Business Bank Account

Once a winding up petition has been advertised in the London Gazette, it won’t take long until your bank gets wind of the situation.
Once your bank is made aware of a winding up petition being awarded, your bank accounts will all be frozen. This means that no payments can be made from or to the company in question.
Additionally, a business who has had their business account frozen by the bank, will also have their credit rating reduced to zero as a result.
It is possible for a frozen bank account to be reopened, but to do so you will need to receive a validation order by a judge — this will give you access to your funds, increasing your chance of keeping your business afloat.

Reputational Damage

A company being issued with a winding up petition can cause serious and substantial long-term harm to the commercial reputation of the business.
Clients and customers may opt to avoid a firm they deem to be insecure, in case they do business and the company is then forced to liquidate, possibly leaving them in the lurch.
Business may also find it much more difficult to obtain credit with an outstanding petition, and any possibly future creditors may deem it pertinent to approach getting their money back much more aggressively due to your company’s track record.

Legal COsts

While a winding up petition against your business is caused by a perceived lack of funds, that doesn’t mean that you only need to pay back what you owe.

Protecting yourself from a winding up petition can be seen as a bit of a Catch 22. You can only attempt to protect the long term financial future of your business by spending additional money to contend with legal expenses that are now required of you.
The business will need to cover all of its own legal fees, and if the winding up petition is found to be justified then you will be obliged to also cover the creditors costs as well, in addition to the petition debt itself.

What Happens if a Winding Up Order is Made?

A winding up order occurs when the judge who is presiding over the winding up petition rules in favour of the creditor. If this happens, it will result in the debtor’s company being placed into liquidation.
This is by far the most serious of all the consequences of a winding up petition, as it represents the final straw for a business. It generally occurs when a company has either not complied with the process, or that they were unable to acquire the necessary funds to pay off the initial debt.
In this situation, your business matters will be taken out of your hands, and the liquidation process will begin.
An Official Receiver will be appointed to the business. Their role is to sell company assets, liquidate the business, and investigate for any signs of misconduct or mismanagement.
A winding up order means the finite end of a limited company, the sale of all assets associated with the business, the termination of all employees, and its dissolution at the United Kingdom’s registrar of businesses, Companies House.

How TaxDebts Can Help with Defending a Winding Up Petition

Receiving a winding up petition can be a stressful time in the life of any business, but it is by no means an excuse to bury your head in the sand, and understanding the consequences of a winding up petition is only half the battle.
The team at TaxDebts are experts in the field, and are here to offer our support and expertise to help you to come out of the other side of what can be a tough time.
A winding up petition could be a hammer blow to the future of any business, but if handled appropriately and efficiently, it doesn’t have to.
For further advice on how you can stop a winding up petition, and to discover more about what TaxDebts can do to help, contact a member of our team today.

What is a Winding Up Petition?

If you’ve received a Winding Up Petition, your company could be set for a turbulent time ahead. In its simplest terms, a Winding Up Petition is a last resort used by HMRC or other creditors — such as utility companies — to recoup money that’s owed to them.
The seriousness of a Winding Up Petition can’t be understated. When a creditor is successful in issuing an order, it may force your business into compulsory liquidation, and all the effort you put into building your company may be lost.
Compulsory liquidation takes away your ability to trade under your company name, which can lead to further mounting debt. Acting too quickly may lead to you making the wrong choice, but not acting fast enough can see your business shut down permanently. To give yourself the best chance, it’s important to understand the Winding Up Process in greater detail to find the most viable option to defend your company.

Who Can Issue a Winding Up Petition?

A significant number of Winding Up Petitions are issued by HMRC — the UK’s tax, payments and customs authority. It’s their job to ensure businesses pay the correct amount of tax and on time. In certain cases, a company may be able to pay its tax bill, but a little time is needed to secure payment. It’s in these scenarios a company can be issued with a Winding Up Petition.

While HMRC is the most common creditor to issue an order, they can be sought by anyone via the assistance of a solicitor, as long as the debt is over £750. A company cannot have more than one petition against it, but other creditors you owe money to can join the existing one as a supporting creditor. Whether they can join is dependant on two key aspects:

• They have evidence that shows you’re indebted to them.
• The initial petitioning creditor allows them to provide support.

Utility companies — such as British Gas, E.ON, and Scottish Power — will often seek to join a petition once it’s become a matter of public record that a business has been issued with an order, highlighting the fact they may be trading insolvent. This can make it more difficult to defend your case, and will result in you having to pay all debts if the creditors are successful.

The Consequences of Receiving a Winding Up Petition From Multiple Creditors

When more than one company supports an order, your case can become more complex, and your company could be hit with a series of tough limitations as well as reputational damage.
Your business’ name will more than likely end up in the Gazette. If this happens, all your creditors and suppliers will know you’re in financial distress. Acting swiftly can prevent this, though, so it’s important to seek professional advice as soon as possible.
In a worst case scenario, your company may be forced to stop trading, as it’s possible your bank will freeze your company account. If this happens, you won’t be able to accept any payments or pay off any other bills, leading to greater financial difficulties. It will also make it much harder for you to gain new custom, as people will assume you won’t be around long enough to fulfill your end of the contract.

What Options are Available?

Your reputation can be seriously affected if you’ve received a Winding Up Petition from multiple creditors, but there are always options available to you. Asking for help sooner rather than later will keep more of these routes open.

Negotiation

Negotiating with your creditors can give you some breathing room, but the companies involved will need to see you’re taking the situation seriously before agreeing to give you more time.
The TaxDebts team can negotiate on your behalf. We’re well known by HMRC’s Enforcement and Insolvency departments for working hard in everyone’s best interests, which means our reputation could help swing things in your favour.

Validation Orders

Having your company bank account frozen will put even more pressure on your finances, but a validation order can give you back access to your funds. In turn, this gives you a greater chance of keeping your business from going under, as you have the opportunity to pay creditors, suppliers and employees.
A validation order has to be granted by the courts, and a judge has to be satisfied that you can make the necessary payments. Our team has gained orders for a variety of different businesses all facing their own unique problems, so we’re in a great position to help you, too.
The sooner you instruct us to help, the better. A validation order can do more than just help save your business; it can help you from a reputational point of view and stop you from going further into debt.

Court Representation

If your creditors are taking the case to court, you’ll need the best person to represent you to ensure the best possible chance of success.

HMRC and utility companies will have access to expert solicitors, so it’s only fair that you have specialist representation, too. Over the many years we’ve been helping businesses with their financial issues, we’ve formed great relationships with leading barristers. Our in-house legal team will instruct the right professional to handle your case.

Recissions

A judge may feel as though the best course of action is to implement the Winding Up Petition placed on your business, but you can still fight the decision.
The judge’s order can be reversed, but only if you apply for a rescission within seven working days of a Winding Up Order being passed.

Dismissals

In some cases, it may be possible to have the Winding Up Order dismissed completely, but this is a very difficult path to tread and requires expert guidance from start to finish.
We’re upfront with our clients about their chances of success and will only present this as an option to you if we think it’s viable. Your creditors must have made a substantive error for this route to be applicable.
The worst thing anyone can do once they’ve received a Winding Up Petition is bury their head in the sand. The problem won’t go away by ignoring it, so make sure to seek professional advice as soon as possible.
The TaxDebts team is here to help. We’re experts in our field, and we don’t believe that having multiple creditors supporting an order means the end of your business.
Whether you want to unfreeze your company bank account or if you’re looking for suitable court representation, we can help. There are many options available to you, but we can only keep them open if you act fast. Get in touch with us today for more information, and we’ll help you make the right choices to save your company.
The worst thing anyone can do once they’ve received a Winding Up Petition is bury their head in the sand. The problem won’t go away by ignoring it, so make sure to seek professional advice as soon as possible.
The TaxDebts team is here to help. We’re experts in our field, and we don’t believe that having multiple creditors supporting an order means the end of your business.
Whether you want to unfreeze your company bank account or if you’re looking for suitable court representation, we can help. There are many options available to you, but we can only keep them open if you act fast. Get in touch with us today for more information, and we’ll help you make the right choices to save your company.

When it comes to being a business owner, routinely making payments to Her Majesty’s Revenue & Customs (HMRC) is a given.
However, it’s not uncommon for businesses to fall behind on payments and amass larger debts, so what can you do? Can you negotiate with HMRC?
In the past HMRC would be allowed greater discretion when collecting debts, allowing them to give some breathing room to smaller businesses going through a tough time.
Unfortunately though, that is now a thing of the past. Inspectors are under increasing pressure to stop any arrears early.
An element of the relationship that remains from the past is that yes, you can still negotiate. If you know how.

Why Negotiating with HMRC is Importants

The role of a business owner does include a responsibility to keep HMRC abreast of your dealings, ensure that all taxes are paid, and all paperwork is completed like clockwork. Failure to do so can result in strict penalties being handed out. These can start as a stern letter, and escalate to small fines, before snowballing to significantly larger fines, and even your business ultimately being liquidated.
When you’ve worked years and years to build a business from the ground up, you don’t want to lose everything in weeks because you’ve been foolhardy with your tax payments.

How Can HMRC Help me?

While not as people-focused as they were in the past, HMRC do still appreciate that the business world can be a brutal place. Even the best owners can experience difficulties from time to time, that’s why they are willing to help if they feel you deserve it.

Time to Pay Arrangement

If investigators believe that you are a fiscally responsible owner who cares about your business and its employees; one who has responded appropriately and efficiently with all investigations and outreach, you may deserve assistance. This comes in the form of a Time to Pay arrangement.

Time to Pay is an agreement between a business and HMRC. It allows the business additional time, usually 12 months, in order to repay debts owed.
However, not all Time to Pay agreements are the same. Details of the agreement, such as the amount paid monthly, and the duration are worked out on a case by case basis.
This spreading out of the debt across an additional period of time allows businesses more flexibility to work and come up with the funds without risking the future of the business. We will discuss Time to Pay agreements in more detail later on in this blog.

Can Everybody Negotiate With HMRC?

The option to negotiate with HMRC is not available to everybody. The taxman will only consider you a viable candidate for their Time to Pay arrangement if they are confident in your capability to make the required repayments over the agreed period of time.
You will not be considered viable if you have any of the following:

• Previous history of late or overdue tax returns
• Past failure to cooperate with agreed repayment schemes
• Lack of clear financial information supplied to HMRC in the process

If you find yourself in the position of being rejected by HMRC, or you feel that you need assistance in preparing for the negotiations, seek expert assistance. TaxDebts have an experienced team capable of helping guide you through the entire process and bring you through the other side.

How to Negotiate with HMRC

As with all forms of negotiation, negotiating with HMRC is all about communicating your perspective punctually, effectively, and efficiently.
Something a lot of people don’t understand about negotiating with HMRC is that they don’t really start when you might think they do.
For HMRC, the negotiations start years before you ever need to speak to them about anything in the first place. If you spent years being avoidant, ignoring calls, letters, and emails from HMRC, you have already shown your hand, and it becomes highly unlikely that the taxman will accept you as a legitimate case for help.
Remain active and engaged throughout all your dealings with HMRC. If a director shows that they are on the ball and are active, HMRC will be much more amenable to negotiating to support a responsible business owner.

Negotiating Time to Pay with HMRC

So, you are unable to pay a debt and think you might need to negotiate a Time to Pay agreement with HMRC, what next?

No matter what the scenario, contact the taxman as soon as possible. Get ahead of the issue. It’s much better to broach it with them than let them contact you asking why you haven’t been able to pay.
But don’t go calling too quickly. Preparation is key. There are certain details that you will want to have prepared, to guarantee that you can decisively answer their questions.
A few things you will need to know or have to hand are:

• Total and accurate amount of the bill you are unable to pay
• Your justification for not being able to pay the bill
• Taxpayer/VAT reference number
• Evidence that you are attempting to rectify the issue
• Statistics surrounding business finances (Income and expenditure, assets, cash flow forecast etc).
• Most importantly – How much you feel that you can pay there and then, and how much time you think will be required to pay the remaining fee off.

It’s vital that you are totally honest during the discussions. At this stage, you won’t gain anything from exaggerating any details. Any deliberate misleading of HMRC can lead to your agreement being cancelled down the line if discovered.
When negotiating with HMRC there are no second tries. There are no bluffs and no poker face is involved. Make sure your points and your proposal are clear, and more importantly, realistic. If you agree to a plan you can’t afford, and default on a payment, your agreement will be void and HMRC will demand the fee in full. Failure to pay will usually lead to swift insolvency against your business.

How Tax Debts Can Assist With HMRC Negotiations

TaxDebts know that serious financial issues can put a strain on you. HMRC breathing down your neck is enough to intimidate anybody.
But don’t worry. Let TaxDebts negotiate with HMRC on your behalf. Through years of tireless work in the field, we have built an excellent reputation with HMRC teams, and have a strong history of successfully negotiating settlements and payment plans in the past.
Contact a member of our team today for further expert advice on how to negotiate with HMRC, and to find out what Tax Debts can do to help you.