Can You Challenge an HMRC Winding Up Petition in 2026?

Yes. While a company cannot stop HMRC from issuing a winding up petition, it can still take action, and, in certain limited  circumstances, prevent the petition from being heard.

A winding up petition must be challenged quickly. The longer the process is left unaddressed, the fewer options remain.

When an HMRC Winding Up Petition Can Be Challenged

A company may apply to dismiss or restrain a petition where:

• The tax debt is genuinely disputed on substantial grounds

• There is a valid right of set‑off or cross‑claim equal to or greater than the petition debt

• There are serious procedural defects

• The petition constitutes an abuse of process

A simple disagreement with HMRC is not sufficient. The Court must be satisfied that the company has genuine arguable grounds with a real prospect of success if the matter proceeded to the Tax Tribunal or trial. This often requires either ‘procedural’ or ‘legal’ mechanisms.

Winding up proceedings are not designed to resolve complex tax disputes.

Substantial Dispute of the Underlying Tax

This is one of the most common grounds for challenging a petition. Examples include:

• An active appeal heard at a Tax Tribunal

• Arguable errors in HMRC’s assessment

• Incorrect calculations or assumptions

• Failure by HMRC to examine relevant representations

If the company demonstrates that the petition involves an arguable issue, the Court may strike out the petition and refer the matter back to the Tribunal.

Genuine Cross Claim or Set Off

A strong counterclaim can be grounds to dismiss or stay a petition. Examples include:

• Overassessment

• Tax refunds

• Repayment claims

The cross‑claim must be:

• Genuine

• Substantial

• Supported by evidence

Weak, speculative or unsubstantiated claims will not succeed.

Abuse of Process

The Court has inherent jurisdiction to stay a winding up petition where:

• The petition is being used purely as a debt collection tool

• The debt itself is disputed and has not been legally determined

Where an abuse of process is established, the petition can be struck out.

Procedural Defects

A petition can be invalidated where there is a serious breach of procedure. Examples include:

• Incorrect company details

• Defective service

• Filing in the wrong court

• Improper advertisement

Minor irregularities may be overlooked, but serious defects require the Court to dismiss or adjourn the petition.

How to Challenge an HMRC Petition

Directors may challenge the petition by applying to the Insolvency and Companies Court for:

• An order dismissing or striking out the petition

• An injunction restraining its presentation or advertisement

If the petition has not yet been advertised, in certain circumstances, a ‘Court Order’ preventing publication may be necessary to avoid immediate financial harm.

Evidence usually required includes:

• HMRC assessments and appeal documents

• Correspondence with HMRC

• Financial evidence of solvency

• Expert or specialist opinion

Once a petition is advertised, banks may freeze accounts, causing severe operational disruption.

Why Acting Early Matters for Directors

As the process progresses, directors’ choices reduce rapidly. Once a winding up order is made:

• Directors lose control of the business

• A liquidator investigates company affairs

• Pre‑insolvency transactions are reviewed

• Wrongful or fraudulent trading allegations may arise

• Director disqualification is possible

Early specialist tax and insolvency advice significantly increases the chance of resisting the petition, negotiating with HMRC, or achieving a solvent restructuring.

Act Before Advertisement

Being notified that an HMRC winding up petition exists does not automatically mean liquidation is inevitable. It is essential to act immediately and take a fast‑track approach, as strict time limits apply and the company must show valid grounds for challenging the petition.

If you become aware that a petition has been presented or that a credible threat has been made, you should seek specialist advice immediately to protect both the business and directors’ interests. 

FAQs 

Q1: Can an HMRC winding up petition be challenged? 
Yes. A petition can be dismissed, struck out or stayed if valid legal grounds exist. 

Q2: What are valid grounds for challenging a petition? 
A substantial tax dispute, a genuine cross‑claim, procedural defects or abuse of process. 

Q3: Can I challenge the petition if I have an active tax appeal? 
Yes. An active Tribunal appeal or arguable assessment errors can justify striking out the petition.