Winding-up orders fall as HMRC seizes more assets from defaulters
The number of winding-up petitions issued by Her Majesty's Revenue and Customs has slumped by more than a third in the past year, according to figures just released, with experts claiming the taxman is increasingly choosing to seize goods from companies instead.
Some 3,733 wind-up petitions were issued by HMRC across the whole of the UK over the financial year 2012/2013, data obtained by law firm Pinsent Masons shows. That is a fall of 42% from the previous 12 months and also the lowest number of winding-up petitions being issued for five years.
The number of successfully obtained winding-up orders fell as well, dropping by 25% to 2,541, from 3,399.
Recent figures have suggested HMRC is increasingly using "distraint", in which it seizes goods from companies who owe taxes.
"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," said Serena McAllister, a senior associate at Pinsent Masons.
"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," she added.
A spokesman for HMRC denied there had been a change in its policy on insolvency proceedings or the rules on how it recovers debts, saying: "HMRC's aim is not to wind up companies but to collect, as efficiently as we can, the debts that are due, using the range of powers available to us."
He added that the number of winding-up petitions fluctuates as they are only served where it believes it is "the best course of action to protect the interests of the Exchequer, in respect of a particular debt."