HMRC seeks more winding up orders as numbers soar in Yorkshire
Yorkshire saw 242 winding up petitions in 2022 and 171 in the first five months of 2023, a rise of 216 per cent against the same period last year. Companies going into liquidation as a result of the petitions increased by 63 per cent in the first five months of 2023 against the same period in 2022.
The study, by Fresh Thinking Capital and RSM UK Restructuring Advisory, examined official data to better understand the challenges facing businesses.
HMRC has also increased the number of companies it is taking legal action against. Nationally, in 2022 HMRC sought 1,058 winding-up petitions, which resulted in 522 companies going into liquidation.
From January to May, the number of petitions has increased to 1,082 from 110, a rise of 883 per cent.
The national data shows that in 2022 trading creditors issued 2,399 winding-up petitions, which led to 1,107 companies going into liquidation.
A winding-up petition is a legal document filed by a creditor against a company that owes them a significant debt. It seeks to force the company into compulsory liquidation, leading to the company's assets being sold off to repay the creditors.
The petition can be served at the company's registered office or to specific individuals associated with the company.
Mel Hird, director of Fresh Thinking Capital, a specialist lender with committed funds that helps businesses and entrepreneurs unlock potential, said: "There are many good businesses that have built up debt through the pandemic and are now facing short-term cash flow issues. Between HMRC arrears and loans, they need short-term support to trade through this period.
“It's essential that these businesses find the funding they need to support growth. Funding empowers companies to explore opportunities, expand into new markets, create jobs, and enhance competitiveness against larger firms.”
Lee Lockwood, partner at RSM UK Restructuring Advisory, said: "It's important that management teams know that help is available.
He added: "Too often, firms leave it too late in the day to seek help, with winding up petitions and liquidation becoming more likely. It's clear that things are getting tougher, and if a company sees a cash flow problem arising, they need to seek advice."
Earlier this year, Scunthorpe United was issued with a winding-up petition over an alleged unpaid tax bill.
The petition for an order was served on January 11, 2023, by HM Revenue and Customs.
Meanwhile, two winding-up petitions were reportedly dropped against Liberty Steel last month.
The petitions looked to place the steel arm and another division into insolvency as owner Sanjeev Gupta was thought to owe creditors more than $1bn.