HMRC Winding-Up Petition: Meaning and Rescue Options
By Oliver Mackman · Reviewed 2026-04-26
You receive a winding-up petition from HMRC, or HMRC has issued a 21-day statutory demand and the deadline is approaching.
What this is
A winding-up petition is a court application to liquidate the company for unpaid debt over £750. HMRC routinely uses it for unpaid VAT, PAYE and Corporation Tax. Once advertised in the Gazette, the company's bank accounts are typically frozen and trading is materially disrupted.
What happens if you do nothing
Bank-account freeze (within days of advertisement). Suppliers may demand prepayment. Customers may withhold payment to avoid being unwound as preference creditors. Credit profile is destroyed. Recovery typically requires either paying the debt and obtaining a withdrawal, a Company Voluntary Arrangement, or administration.
Options, in order
- Speak to a licensed insolvency practitioner before the petition is advertised. The 7-day window between petition issue and Gazette advertisement is critical.
- Pay the debt in full if cashflow allows, HMRC will withdraw on payment plus costs.
- Negotiate emergency commercial finance against any unencumbered asset (specialist lenders only, mainstream lenders will not engage with a pending petition).
- CVA or administration as the next step if commercial finance cannot be raised in time.
Which UK lenders engage
- · Specialist post-decline / emergency lenders may engage with personal-guarantee security if any unencumbered asset is available.
- · Asset-backed bridging against commercial property (4-6 week decision is too slow without a pre-approved facility).
- · Note: most mainstream UK SMB lenders will not engage with a company that has an outstanding winding-up petition.
HMRC-specific notes
HMRC almost always accepts payment in full (debt + costs) up to the hearing date. The challenge is raising the cash inside the timeline. Engage a licensed insolvency practitioner immediately, most offer free initial consultations.
Do not do this
- · Pay any other creditor before paying HMRC once the petition is issued, that may constitute a preference and personal liability for the director can follow.
- · Continue trading as normal, the duty to creditors shifts at the point insolvency is reasonably anticipated.
- · Ignore the petition, judgment in default is automatic if no defence is filed.
When to call an advisor before borrowing
Always. A licensed insolvency practitioner must advise before any borrowing decision once a petition is issued. Borrowing into insolvency may be a wrongful-trading event for the director.
Related
- · All HMRC pressure scenarios
- · Our post-decline routing (if mainstream lenders have declined)
- · After a decline: alternative lenders
Editorial only. We are not an FCA-authorised adviser or licensed insolvency practitioner. For active enforcement action, contact a licensed insolvency practitioner directly.