HMRC changes tack on distressed companies

15 Jul 2013 | 09:43 am | 1 min. read

- Company winding-up petitions fall 42% while winding-up orders drop 25% in a year - Petitions filed to wind-up companies are at a five year low - Seizing goods by the use of distraint on the rise

The number of petitions issued by HM Revenue & Customs (HMRC) to wind-up companies and place them into liquidation in the UK has fallen 42% in the past year, according to restructuring specialists at international law firm Pinsent Masons.

Data obtained through a freedom of information request shows only 3733 petitions for winding up companies were issued by HMRC in 2012/13 compared to 6440 in 2011/12 – representing the lowest figure for 5 years.  Similarly, the number of company winding-up orders successfully obtained has fallen 25% in the past year, dropping from 3399 to 2541.

Scotland saw the biggest decreases, winding-up petitions issued by HMRC were down 68% and winding-up orders obtained fell by 48%. Northern Ireland saw a drop of 46% and 8% respectively, while England & Wales saw filed petitions drop by 37% and winding-up orders fall 20%.

In contrast, Pinsent Masons says that there has been a corresponding rise in the use of distraint by HMRC.  Distraint is the statutory right of HMRC to visit a business premises and seize goods to recover unpaid taxes. 

Change in Tack

Serena McAllister, a senior associate in the Restructuring team at Pinsent Masons, says:

"The figures speak for themselves. The drop in petitions to wind up companies and place them into liquidation, combined with evidence that suggests HMRC is increasingly using its powers to seize business assets, show that HMRC is now using distraint as its preferred method of enforcement.  Interestingly, this tactic appears to be paying off as HMRC's recovery rate has increased significantly, which is good news for the taxpayer although not so good news for businesses."   

"HMRC is becoming increasingly aggressive in the use of its powers to seize assets in order to recoup outstanding tax.  Having lost is preferential creditor status, distraint allows HMRC to effectively jump to the front of the queue of creditors and obtain priority in respect of those seized assets.  For some companies, particularly SMEs, the seizure of its assets could be the final blow and may even force businesses into insolvency in some instances."   

Pinsent Masons says that several businesses have ceased to trade following tax problems, with the likes of Comet, law firm Cobbetts, Rangers and Hearts football clubs being among several examples.

Latest press releases

Show me all press releases

Pinsent Masons appointed by HEINEKEN UK as its principal legal supplier

Multinational law firm Pinsent Masons has been named by HEINEKEN UK as its principal legal provider.

Pinsent Masons advises Clarios on Series B1 financing round of Altris

Multinational law firm Pinsent Masons advised Clarios on its investment in Altris as part of the Series B1 financing round.

Pinsent Masons continues expansion in Australia with two senior corporate appointments

Multinational law firm Pinsent Masons has continued its expansion in Australia with the appointment of partner James Stewart and special counsel Roger Hawkins to our corporate team.

People who viewed this press release also viewed

Show me all press releases

Pinsent Masons welcomes new financial services corporate partner Walter Clark

Multinational law firm Pinsent Masons has appointed Edinburgh-based partner Walter Clark to join its UK financial services corporate team.

Pinsent Masons advises senior and equity bridge lenders on Khalifa University Student Accommodation public-private partnership project

Multinational law firm Pinsent Masons has advised HSBC, Korea Development Bank, The Norinchukin Bank, Intesa Sanpaolo, and Abu Dhabi Commercial Bank on all aspects of the project financing of the Khalifa University Student Accommodation public-private partnership (PPP) project.

Pinsent Masons advises SPE Capital in the sale of Amanys Pharma to Laprophan

Multinational law firm Pinsent Masons has assisted SPE Capital, an independent management firm, in the sale of Amanys Pharma to Laprophan, a pioneering pharmaceutical company in Morocco.

For all media enquiries, including arranging an interview with one of our spokespeople, please contact the press office on

+44 (0)20 7418 8199 or 

Location contacts

We are processing your request. \n Thank you for your patience. An error occurred. This could be due to inactivity on the page - please try again.