HMRC is no longer playing softly. In early 2025 a Freedom of Information request revealed that the number of winding‑up petitions issued by HMRC had surged to a staggering 36,686.
This marks a dramatic increase from the 1,414 recorded at the start of the same year.
This marks a nearly 2,500 % rise, highlighting a substantial shift in the tax authority’s approach to collecting arrears.
(Read Time: Approx. 4 minutes)
Topics Discussed:
- The sharp rise in HMRC winding‑up petitions and what it means for UK businesses
- Proactive steps you can take now to avoid enforcement action and protect your business
HMRC’s enforcement ramp up
The scale of change in how HM Revenue & Customs (HMRC) is pursuing tax debts is striking.
New figures show that tax debt owed to HMRC reached approximately £43.8 billion at the end of September 2025, up from £42.6 billion at the end of the previous quarter.
Alongside this, winding‑up petitions filed by HMRC are rising sharply.
HMRC has also restructured its operations, increasing its enforcement communications substantially and dedicating more resources to compliance.
All of this means that businesses with unpaid tax liabilities are facing a far greater risk of formal legal action than in previous years.
What is a winding-up petition?
A winding-up petition is a formal legal request made to the court to close a company that cannot pay its debts.
It is usually filed by a creditor (such as HMRC) and, if successful, results in the compulsory liquidation of the company’s assets to repay outstanding liabilities.
Once a petition is advertised in the Gazette, it can severely damage a company’s credit standing, often prompting banks to freeze accounts and suppliers to withdraw services, even before the court makes a final decision.
Why this matters for your business
Receiving a winding‑up petition from HMRC is severe.
The process usually begins with payment reminders and statutory demands but can escalate rapidly once HMRC considers other measures insufficient.
HMRC often uses the threat of a winding‑up petition to force settlement of unpaid VAT, PAYE/NIC, corporation tax or other liabilities.
Once a petition is served, a business may face frozen bank accounts, supply chain disruption, and a loss of customer or supplier confidence.
Even if the petition is adjourned or settled, the damage to operations and reputation can be significant.
Adding to the pressure, overall company insolvency rates remain high.
In October 2025 there were 2,029 registered company insolvencies in England and Wales, which is 17 % higher than the same month last year.
This backdrop means that financial resilience, strong cashflow management and early action matter now more than ever.
Steps you should take now
If you suspect your business could be at risk or you already have tax arrears, you should act before HMRC files a petition.
Consider the following actions:
- Negotiate a Time to Pay arrangement: HMRC is still offering these agreements in many cases – spreading payment over time may head off escalated enforcement.
- Protect your payroll and suppliers: Ensure you prioritise obligations such as employee wages and national insurance contributions to avoid triggering further enforcement or insolvency risk.
- Stress‑test your customers and suppliers: In some cases, your risk is driven by others’ failures to pay, so monitor key relationships.
- Keep ahead of bank account freezing: If HMRC files a petition, your bank may freeze accounts, often within days of the petition being advertised.
- Seek early expert support: Whether it’s tax negotiation, restructuring, or insolvency advice – the earlier you engage specialists, the wider your options.
Key legislative and procedural changes to note
One recent update is that from 11 April 2025 HMRC’s Enforcement and Insolvency Services phone numbers changed.
While this is a small detail, it signals HMRC’s increasing formalisation of the enforcement process.
Another important point is the continued dominance of HMRC’s winding‑up petitions in the overall picture: one legal guide notes that HMRC accounts for the majority of winding‑up petitions in England and Wales.
And crucially, the thresholds have become firmer – debts of £750 minimum may trigger a petition, but in practice HMRC tends to act on much larger tax liabilities.
What this means for directors and business owners
As the enforcement environment tightens, directors need to be aware of potential personal liability risks.
Once a winding‑up petition is served, the company is effectively in limbo, and any mis‑steps could lead to claims for wrongful trading or preferential transactions by the liquidator.
Also, even if you believe your business is solvent, if you receive a petition, you should treat the situation as critical.
The formal notice being advertised in the London Gazette is likely to alert banks, suppliers and customers, and the business may become isolated even before formal liquidation.
Summary
HMRC has ramped up enforcement efforts with an unprecedented rise in winding up petitions, signalling a tougher stance on unpaid tax.
With thousands of new staff and vast funding behind them, the tax authority is accelerating actions that can strangle businesses without warning.
But there is still time to act.
Negotiating with HMRC, protecting your cash flow and seeking expert guidance can make all the difference.
If your business is in difficulty or you’re concerned about what lies ahead, get in touch with us today and take control before HMRC does.
Fill out our form here for any questions, email us at info@taxexpert.co.uk, or message us on our WhatsApp for out of office hours.
Kind regards,
Ilyas Patel
