Talk to us today in confidence0800 970053907833 240747

HMRC Warning Letter of Enforcement by Distraint or a Winding Up Petition

Written by Keith Steven Managing Director 4 October 2021

Example HMRC 7 day warning letter

HMRC Warning Letter of a Winding Up Petition

You will receive an HMRC 21 day warning letter if you are late with your tax payments and VAT and PAYE remains unpaid. It is designed to lead you to a negotiation for payment of the debt. The letter itself states that if the payment isn't made within 21 days from the date of the letter, the Solicitor of HM Revenue & Customs will present a petition to the High Court to wind up the company due to its insolvency or start other legal actions.  This is in effect, a letter before action. Attached to the letter will be a statement of liabilities outlining the debts this warning letter covers. What is HMRC likely to do?

They have a number of aggressive debt collection tools available:

  1. Issue a County Court Summons to get a County Court Judgment
  2. Send in a Revenue officer from their Field Force or send a Bailiff after a Notice of Enforcement
  3. Issue a winding up petition following the letter.

You must act quickly to rectify these issues as the petition must be advertised in the London/Belfast Gazette within 21 business days of being issued. This can lead to the company's bank accounts being frozen and other creditors supporting the petition, therefore making it harder for the company to be salvaged, as more organisations need to be paid.

What should I do if I can't pay?

First things first, don't just ignore the letter - HMRC will automatically take action if they don't receive a response within 21 days. The ideal way to solve this issue is to pay the debt. However, many companies are not in a position to do so. To avoid this, there is a great solution called a Company Voluntary Arrangement (CVA). A CVA is simply a deal between the insolvent company and its creditors; this deal places a legal ring fence, called a moratorium, around the company and stops creditors attacking the company. It allows a viable but struggling company to repay some, or all, of its historic debts out of future profits, over a period of time to be agreed.

Directors stay in control of the company, stopping legal actions like HMRC winding up petitions, if you use a quality, experienced advisor for support, such as us at KSA.

So what can HMRC do to collect its tax arrears?

They can issue:

  1. County Court Summons
  2. County Court Judgement (CCJ)
  3. Bailiff actions or warrant
  4. Notice of enforcement
  5. Winding Up Petition

Visit our page on creditors legal actions for definitions and advice for all the above.

The most important thing is really not to ignore the letter. If HMRC say they will take action in 21 days they usually will.

Categories: HMRC Time to Pay Arrangement, HMRC Time to Pay Arrangement for VAT and PAYE

A Worried Director

The Ultimate Guide For Worried Directors

Worried about poor cashflow? Feel you have got into a bit of a mess? Covid-19?, How to pay wages on pay day? For reassuring advice on a range of issues download our free Ultimate Guide For Worried Directors today. Or just call us on 0800 9700539

"KSA Group which owns this site, will help you fix problems in your business. We won't charge for any initial advice or face to face meetings. We speak in English. We will save you money and your precious time.  You can come to any of our offices

"We also follow up any meeting with a full "solutions report" which runs on average to 13 pages valuable free advice!!  No other practitioner offers this service.  In this report we advise on ALL the options and explain them clearly.  We advise on a course of action given the information you have given us ( the more information we have the better we can advise!)"

You are currently offline. Some pages or content may fail to load.