The spike comes amid the tax authority stepping up its efforts to recover billions in outstanding tax liabilities, says the national accountancy group UHY Hacker Young.

Data shows HMRC is owed £42.8 billion in tax debt that is in arrears (National Audit Office, as at March 31 2024/25) and has been given additional resources in the last two budgets to tackle the problem.

It aims to recruit a further 2,400 debt management officers by 2029/30.

HMRC has been using winding up petitions as a tool to chase unpaid tax debt. A ‘winding up petition’ is one of the most serious debt recovery tools available to creditors. If successful, it can force a company into liquidation, with its assets sold to repay outstanding debts.

2,397 of HMRC’s winding up petitions were progressed in the last year to become “winding up orders”, a 27% increase from 1,886 the year before. A winding up order is the final stage of the process and means a company is forced into liquidation by the courts, with its assets sold to repay creditors.

Peter Kubik, Partner at UHY Hacker Young, says: “HMRC is increasingly using winding up petitions and the threat of liquidation as a debt collection tool. It should serve as a warning to directors that tax debts are being taken more seriously than ever by HMRC as they try to reduce the mountain in unpaid tax.”

Many businesses continue to face challenging trading conditions, including rising employment costs, higher borrowing costs and higher taxes. These pressures have made it harder for some businesses to meet their tax obligations.

Businesses experiencing temporary cash flow difficulties may be able to agree a Time to Pay arrangement with HMRC that will prevent their business being shut down. These agreements allow tax liabilities to be paid over an extended period rather than in a single lump sum.

Mr Kubik added: “The key point for businesses which are struggling to meet their tax obligations is to not ignore the problem. HMRC is often willing to discuss payment options where companies engage early and are transparent about their circumstances.”