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Winding up petitions in sharp increase in February

7 March 2012

In our latest analysis of winding up petitions we can report on a sharp increase in the number advertised in February of this year.  In February 2011 there were 537 winding up petitions advertised but in February 2012 this went up to 879! This was the biggest increase we have seen.  As HMRC are the main issuer of petitions then this shows that they are beginning to take a hard line against companies who owe tax.

Interestingly the number of petitions issued in January was down on last year.  HMRC use a variety of methods to collect tax and we have also seen an increase in the use of distraint. Basically they tend to vary their collection methods no doubt to test and see what is most effective.

If the petition is heard in court then the company can be wound up or, to use another term, put into compulsory liquidation. The Official Receiver (OR) appointed by the court has a statutory duty to investigate the behaviour of the directors.

So don't let it get to that stage! If you have been served a winding up petition then you must act because if the petition is advertised then the bank will freeze the account to prevent "disposition of the assets" They freeze it because any transaction after the petition can be reversed by the court. In order to unfreeze the account you will need a validation order which is expensive and takes time as documents will need to be put before the court explaining why you should be allowed access to your account.

We can get a lawyer to argue for the petition hearing to be adjourned and in many cases this can be for more than 30 days and delay any advertisement. This is more cost effective than having to seek a validation order.   This allows us time to draft a CVA and get the petition withdrawn.  Call us on 0800 9700539 for details

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