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 named as one of Stonewall's Top Global Employers 2020

Multinational law firm Pinsent Masons has been recognised as a leading lesbian, gay, bi and trans employer by LGBT charity Stonewall in its Top Global Employers Index 2020 for the fifth consecutive year.

Pinsent Masons advised Schütz Family Office on the acquisition of Freie Internationale Sparkasse

Multinational law firm Pinsent Masons has advised Schütz Family Office on the acquisition of private bank Freie Internationale Sparkasse S.A..

Pinsent Masons named a top ten family friendly employer for fourth year in a row

Multinational law firm Pinsent Masons has been named as one of the top ten family friendly employers in the UK by work life balance charity, Working Families.

People who viewed this press release also viewed

Show me all press releases

Pinsent Masons advised Schütz Family Office on the acquisition of Freie Internationale Sparkasse

Multinational law firm Pinsent Masons has advised Schütz Family Office on the acquisition of private bank Freie Internationale Sparkasse S.A..

Launch Climate Change Mitigation Sustainability platform

Multinational law firm Pinsent Masons has appointed energy partner Paul Rice to lead its newly created Climate Change Mitigation and Sustainability group as it seeks to embed a coordinated, firmwide approach to the climate crisis.

Pinsent Masons advises EmpatKali founders in deal that signals Asia expansion for Afterpay

Multinational law firm Pinsent Masons has advised the founders of EmpatKali, Jamie Camidge and Hadi Tanzil, on the sale of the company to Afterpay.

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