Close Menu
UK Liquidators

Can HMRC liquidate a company?

Low-Cost Liquidation
100% Confidential
Stop HMRC & Creditor Pressure
Partner-led Service

What powers do HMRC have to recover tax arrears?

If your company owes money to HMRC and they present a winding up petition at court, the company will be liquidated if a winding up order is granted. HMRC commonly use winding up petitions as a method of debt recovery when they believe a business with tax arrears has insurmountable financial problems.

This is why, if your business is in financial distress and you can’t meet your tax obligations, you should take the initiative and contact HMRC as soon as possible to arrange more time to pay. 

What is an HMRC Time to Pay arrangement?

The HMRC Time to Pay scheme, or TTP, spreads repayments over several months – in some cases up to 12 months – and gives you a valuable breathing space from the threat of liquidation.

HMRC may be more inclined to arrange a TTP if you’re proactive, however, and let them know your company’s financial situation as soon as you know you won’t be able to make a payment. It’s important to note that you can pay tax arrears via a Time to Pay arrangement, but you still need to keep up with your current tax liabilities.

Worried about your Bounce Back Loan?

If you are a limited company director worried about how you are going to repay your Bounce Back Loan, we are here to help. As licensed insolvency practitioners we can talk you through your options when it comes to repaying your outstanding Bounce Back Loan, as well as handling all negotiations with creditors on your behalf. Call our team today on 0800 063 9262 .

Other HMRC debt recovery methods

If a Time to Pay arrangement breaks down because you can’t keep up the payments, HMRC may decide to try to liquidate your company, but they can also use the power of distraint, which means they would seize business goods to the value of the debt.

If the worst scenario does occur and HMRC try to liquidate your company via a winding up petition, what happens next, and is there anything you can do to prevent a winding up order being granted?

How does HMRC liquidate a company?

If your company owes a debt of £750 or more, a creditor can petition the court to have your business wound up and liquidated. HMRC commonly take this course of action when they believe directors of a debtor business are deliberately avoiding payment, or that the company is insolvent.

HMRC has the power to present a winding up petition without issuing a Statutory Demand or County Court Judgment (CCJ), however, so this process can happen very quickly. Once the petition has been made, you must not sell or otherwise dispose of company assets, as you could face serious repercussions if it’s later liquidated.

When a winding up order is granted by the court, the Official Receiver (OR) administers the liquidation process and undertakes an investigation into the actions of directors leading up to insolvency.

Start your online liquidation today

If you have decided liquidation is the right option for your limited company, you can take the first step and begin the process online using our online portal. Starting the process is quick, simple, and can be done at a time that suits you. Your information will be submitted to your local UK Liquidators insolvency practitioner who will be with you every step of the way. Click here to start your company’s liquidation online.

What can you do to avoid HMRC liquidation?

Acting quickly and proactively can be your best defence against liquidation by HMRC. This means developing a business case for acceptance onto the Time to Pay scheme, and presenting reliable facts and figures during the application process.

If you believe the debt has been incorrectly stated by HMRC, you can also dispute the winding up petition. Professional guidance is crucial when you believe HMRC may try to liquidate your company, and taking early advice is highly recommended.

You may be able to formally renegotiate your debts under a Company Voluntary Arrangement (CVA), but if liquidation is unavoidable, a Creditors’ Voluntary Liquidation process is preferable to being forcibly wound up.

UK Liquidators has extensive experience of helping directors voluntarily liquidate their companies, and can provide trustworthy independent advice if you fear compulsory liquidation by HMRC.

Our partner-led team will arrange a same-day consultation free-of-charge, to quickly establish your company’s situation and the best way to proceed. We operate a broad network of offices around the UK, so you’re never far away from confidential professional guidance.

Jonathan Munnery
Insolvency & Restructuring Expert

If you are considering liquidation for your limited company, taking advice from a licensed insolvency practitioner can help you understand your options.

Is liquidation the right option for you?

Take our 60 second test and find out

Company health risk assessment
Types of liquidation available
Alternatives to liquidation
Understand your next steps
60 Second Liquidation Test
Did you know?
Are you eligible to claim Director Redundancy?
As a Limited Company Director you may be entitled to claim Director Redundancy - Average UK claim is £9,000*.
Pages related to Can HMRC liquidate a company?
A Creditor Tablet
How can I stop a creditor putting my company into liquidation?
Hammer In Court
What is the role of the Official Receiver in a liquidation process?
Businessman With Calculator
Company is facing a winding up petition
Ready to Liquidate?
Express Liquidation Service
Ready to start liquidating today? Complete the form and a member of our team will be in touch.
Please note: By completing this form you are not liquidating your company
Contact the UK Liquidators Team

If you are considering liquidation for your company, taking expert advice at an early stage is crucial. At UK Liquidators, our team of licensed insolvency practitioners are committed to providing limited company directors with the help and advice they need to make an informed decision.

  • Free initial consultation
  • Strictly confidential
  • Fully licensed insolvency practitioners
  • Local office support
  • Named case handler throughout
Logo Tma
Logo Business Recovery
Logo Cse
Logo Iip

Looking for immediate support?

Complete the below to get in touch

100% Free & Confidential Advice

This site uses cookies to monitor site performance and provide a more responsive and personalised experience. You must agree to our use of certain cookies. For more information on how we use and manage cookies please read our PRIVACY POLICY