HMRC Winding Up Petitions – Calm Before The Storm considers the potential matter of winding up petitions that are conceivably likely to rocket from HRMC in the new year.
Covid-19 has led to a restriction for much of this year on the commencement of enforcement proceedings, making it more difficult in recent times for a company to expect to obtain a winding up order.
The Corporate Insolvency and Governance Act 2020 was passed earlier in the year. The government website at the end of June had this to say:
The Act is the largest change to the UK’s corporate insolvency regime in more than 20 years. It introduces new corporate restructuring tools and temporary easements to give distressed businesses the breathing space they need to get advice and seek a rescue.
One of its key provisions is the introduction of the new role of a Monitor to oversee the corporate moratorium it introduces – an extendable 20 working day period giving businesses protection from creditor action while they seek professional restructuring advice. A monitor must be a licenced insolvency practitioner and the Insolvency Service has provided guidance on their role and responsibilities. The Act also extends the suspension of termination clauses when a company enters into an insolvency procedure and introduces a new restructuring plan that has the ability to bind creditors to it.
The Act also provides temporary relief until 30 September 2020 from being subject to a winding up petition and from wrongful trading provisions where a business can demonstrate its difficulties arise from trading conditions arising from the COVID-19 pandemic. These easements are explained in more detail in a series of factsheets.
Changes to company filing and meeting requirements have also been introduced to relieve the burden on businesses during the pandemic and allow them to focus all their efforts on continuing to operate.
The restrictions on issuing winding up petitions has now been extended until the end of the year.
HMRC And Winding Up Petitions
At the moment according to the London Gazette website information the last winding up petitions lodged by HMRC this year were on 20 March 2020.
It appears that during 2019, 2018 and 2017 HMRC lodged 588, 436 and 447 winding up petitions respectively. Whereas so far in 2020 they have lodged 158 winding up petitions.
According to London Gazette information during 2019, 2018 and 2017 there were 3051, 2982 and 2812 winding up orders made. So far in 2020 it seems that there have been 1328 winding up orders made.
Therefore it seems likely that once HMRC is free to start issuing winding up petitions again that the numbers could conceivably really take off. HMRC is likely to be under some pressure to collect in revenue for what is a much depleted Exchequer. Will there be more HMRC winding up petitions than ever before as a result when the restrictions are removed?
