The predicted huge insolvency figures following the partial release of Winding up Petition restrictions have not materialised as predicted by the press.

This is because of Government pressure on HMRC and the Banks to hold off from issuing Winding up Petitions until March 2022, in line with the restrictions on landlords.

Today in the London Company Court there were only 15 company winding up petitions, not even the usual hundreds.  So we are still seeing a false picture given that the media are saying that there are over half a million zombie companies stagnating.

Many of those companies have filed for dissolution and in normal times those companies with known Corporate HMRC Debts would be refused this action.  It now looks like the majority of voluntary dissolution’s are being accepted in order to reduce the flood of winding up petitions in March.

This would make sense if true, as HMRC is likely to bring the companies back to life in the future through the double barrelled order process when the rush is over.  There isn’t the manpower or time in the companies Court to deal with the true figure of insolvent companies and so HMRC are playing the long game. 

The banks that lent the money through Covid loans are also following the same pattern.  HMRC have not stood still but have taken to issuing many more Tax Bonds on companies that have failed to organise a payment agreement or set up new companies, leaving behind the debts in the old. This in many cases can stop companies from trading, especially if a VAT number is removed, as trading on can become a criminal offence. 

Going Personal

HMRC and the banks have been pushed into a corner and they do not like this one bit.  The Orian Think Tank has worried many SME directors when they have warned that the HMRC may be considering removing the veil of limited liability on Corporate HMRC Debts.

The first steps are partial creditor preference status which is now in place, the next will be total preference status and the final step is the implementation of personal guarantees for directors to pay outstanding taxes. This is only a matter of time.