Published: 18/06/2026 By Andrew Bailey
One of the questions I've been asked most frequently in recent months is:"What should we do if our company receives a winding up petition?"
Increasingly, these enquiries involve HMRC as the petitioning creditor.
It is well known that winding up petitions are one of the enforcement routes available to HMRC when seeking to recover unpaid tax liabilities. By the time a petition is issued, HMRC has often been pursuing the company for some time and previous attempts to resolve the position have been unsuccessful.
In many cases, either no Time to Pay (TTP) arrangement has been agreed, or an existing arrangement has failed.
We are also seeing HMRC take a firmer approach to debt recovery than in previous years. Time to Pay arrangements are often being restricted to shorter repayment periods, typically between six and twelve months, and HMRC appears increasingly willing to escalate matters where arrears remain outstanding.
What happens when a Winding up Petition is received?
A winding up petition is a formal court application asking the court to place a company into compulsory liquidation.
The petition will set out the debt claimed and provide a date for a court hearing.
At that hearing, the court has several options available. These may include making a winding up order, which would place the company into compulsory liquidation. Alternatively, the court may adjourn the hearing, particularly where directors are actively pursuing a credible alternative solution.
It is often at this stage that professional advice can make a significant difference.
Why early action matters
A winding up order will frequently represent the worst possible outcome for stakeholders.
The consequences can include:
- Loss of value within the business
- Closure of the company
- Loss of employment for staff
- Disruption to customers and suppliers
- Reduced returns for creditors
However, it is important to understand that receiving a winding up petition does not automatically mean the business is beyond rescue.
What it does mean is that time is critical.
Alternative outcomes may still be available
Every situation is different, but in a number of recent cases we have worked with directors to achieve outcomes that avoided immediate compulsory liquidation.
These have included:
- Settling HMRC liabilities in full
- Obtaining adjournments to allow restructuring plans to be implemented
- Supporting companies entering administration where this offered a better outcome for creditors
- Preserving employment and protecting business value
- Obtaining validation orders to allow continued trading
Constructive engagement with HMRC helped provide the time needed to progress that solution, and HMRC was comfortable supporting an adjournment of the petition hearing while the plan was put in place.
These cases demonstrate why it is important not to assume that a winding up petition automatically means the end of the business.
Don't wait until it's too late
In an ideal world, advice is sought before a winding up petition is issued.
When tax arrears begin to accumulate and a case starts progressing through HMRC's debt management process towards its Enforcement and Insolvency teams, there may be more options available and more time to consider them.
Unfortunately, many directors delay seeking advice until a winding up petition has already been served.
At that point, the situation has often reached what I would describe as the "last chance saloon". The options may be narrower, and the timescales much shorter.
That said, receiving a petition does not mean it is too late to act.
If your company has received a winding up petition from HMRC or another creditor, obtaining advice as quickly as possible can help you understand the options available and determine the best course of action.
The earlier advice is sought, the more opportunities there are likely to be to protect value and achieve a better outcome for the business and its stakeholders.