HMRC & creditors
What is a winding-up petition, and what do I do in the first 7 days?
Short answer
A winding-up petition is a creditor asking the court to close your company. The critical point is advertisement in the Gazette, which usually happens around seven business days after service and normally causes the bank to freeze the company's account. Act on the day you receive it: get advice, protect payroll, and decide whether to dispute, pay, or take a different route.
What is a winding-up petition?
It is a formal court application by a creditor, often HMRC, asking for the company to be wound up compulsorily because it cannot pay its debts. It is the most serious step an unsecured creditor can take.
A petition is not the same as a statutory demand. A demand is a warning with a 21-day clock. A petition is the action itself, and it has already started.
Why does advertisement matter so much?
Once the petition is advertised in The Gazette it becomes public. Banks monitor it, and the company's account is usually frozen as a result. That is the moment most directors describe as the point things became unmanageable.
Advertisement normally cannot happen for seven business days after service. That gap is the window in which the most useful decisions get made.
What should happen on day one?
- Check the date of service and count the seven business days.
- Read who the petitioning creditor is and what the debt is said to be.
- Get advice the same day. This is not a week to spend deciding who to call.
- Think about payroll and any payment the company has to make before the account might freeze.
- Do not make selective payments to favoured creditors without advice, because that can be unwound later.
What are the options once a petition has been served?
| Route | When it applies |
|---|---|
| Pay or settle the debt | The debt is genuinely due and the money is available or can be raised quickly. |
| Dispute the petition | The debt is genuinely disputed on substantial grounds, which needs to be evidenced properly and fast. |
| Creditors' Voluntary Liquidation | The company is insolvent and the directors would rather close it in an orderly way than be wound up by the court. |
| Other formal options | Where a rescue procedure is realistic. Whether one is depends on the facts, and a licensed insolvency practitioner decides on any formal appointment. |
Doing nothing is not on that list, because it hands every decision to the court and the petitioning creditor.
What happens to the directors?
In a compulsory winding-up the Official Receiver reviews the directors' conduct. Directors who took advice early and acted on it are in a much better position than directors who carried on and hoped.
Personal guarantees are unaffected by the company's closure, and an overdrawn director's loan account will be pursued. Both are better dealt with now than later.
Reviewed by Michael O'Connor, M.A. (Cantab), MABRP
Director and lead adviser. Last reviewed 2026-09-25.
Common questions
How long do I have before the petition is advertised?
Normally around seven business days from service, though you should treat the position as urgent immediately and check the exact dates on the documents.
Will the bank really freeze the account?
In most cases the account is frozen once the petition is advertised. Plan for that rather than hoping otherwise.
Can the petition be withdrawn?
A petitioning creditor can withdraw or adjourn if the debt is settled or the position changes, but other creditors can also substitute themselves onto the same petition.
Can I still choose a voluntary liquidation instead?
In some circumstances yes, but the window narrows quickly once a petition exists. That is why the first call matters so much.
Talk it through before you decide anything.
Free, confidential and informal. Michael replies personally, usually the same day.
Clear options for directors under pressure. One adviser, from the first call to the finish.
This page is general information, not legal or financial advice.