The first 48 hours: winding-up petition, statutory demand or HMRC threat
The first two days decide how many options the company keeps. Start by working out which document you have, because each runs on a different clock. A statutory demand gives the company 21 days to pay before the creditor can petition. A winding-up petition cannot be advertised in The Gazette until 7 business days after it was served, and that pre-advert window is when you have the most room. An HMRC warning that it may close the company starts no legal clock yet, but HMRC can follow it with a statutory demand or a petition, and then a clock does start. In all three cases: note the date and how the document arrived, do not pay one creditor ahead of the others or move assets, and speak to a Licensed Insolvency Practitioner the same day. This page covers England and Wales. It is general information, not advice. Insolvency Act 1986; Insolvency (England and Wales) Rules 2016; gov.uk
Which document do you have?
Directors often describe any frightening letter as "a petition". The difference matters, because the deadlines and the remedies are different, so check this first.
| What you have | How to recognise it | Is it at court or public? | The clock |
|---|---|---|---|
| Statutory demand | A written demand in the prescribed form for a debt of more than £750, left at the registered office. It must say the company has 21 days to pay and that it can apply to court for an injunction to stop a petition (IA 1986 s123(1)(a); IR 2016 r7.3) | No. It is a creditor's document, not a court one, and it is not advertised | 21 days from service. After that the creditor can present a winding-up petition |
| Winding-up petition | A sealed court document naming the petitioner and giving a hearing venue and date (IR 2016 r7.9; IR 2016 r7.10) | Yes. It has been presented to court, and the petitioner must give notice of it in The Gazette | The Gazette notice can appear no sooner than 7 business days after service, and at least 7 business days before the hearing (IR 2016 r7.10(4)(b)) |
| HMRC letter or call saying it may close the company | HMRC says it will tell you before it takes action, and that action can include closing down the company if the tax is a business tax (gov.uk) | Not yet. A warning is not a court step | No statutory clock starts from the warning. The clock starts when HMRC serves a statutory demand or a petition |
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A creditor does not have to serve a statutory demand before petitioning. It can instead ask the court to find that the company cannot pay its debts as they fall due (s123(1)(e)), so a petition can arrive with no warning letter first. If you are not sure what you are holding, treat it as a petition until someone qualified has read it.
The first hour, whichever it is
- Write down the date and time it arrived, how it arrived (left at the registered office, posted, handed to someone) and who received it.
- Record the creditor, the amount claimed and what the debt is said to be for. Check it against your own ledger: is the whole sum genuinely owed and due?
- If it is a petition, note the hearing date and court. Work out your dates on the petition timeline tool.
- Check whether any petition has already been advertised against the company with the winding-up petition lookup. Another creditor may already be ahead of this one.
- Tell your fellow directors today and hold a short board meeting. Minute what you knew and what you decided, using the board minutes template.
- Stop and think before any unusual payment. The what-not-to-do table below explains why.
Track 1: a statutory demand has been served
You have 21 days from service, and the first two of them are for deciding which of three positions you are in: the debt is owed and can be paid, it is owed and cannot be paid in full, or it is genuinely disputed.
Within 24 hours
- Put the 21-day end date in every director's diary. Count from service, not from the date printed on the demand.
- Pull the paperwork behind the debt: the contract or order, invoices, delivery notes, any complaint or credit note, and every email about a dispute. A dispute you can evidence is a very different thing from one you merely assert.
- Check the company's real cash position: bank balance, what is due in and out over the next few weeks, and the other debts now due. The cash flow runway calculator gives a quick read.
Within 48 hours
- If the debt is owed and affordable: pay it, or agree in writing with the creditor how it will be secured or compounded. A verbal promise does not stop the clock.
- If it is owed but not affordable: the company is probably failing the cash-flow test, and that is a wider problem than one creditor. Run the insolvency test and take advice before offering anything, because what you offer this creditor has to be fair to the rest. The formal routes gov.uk lists at this stage are a CVA, administration or a liquidation you start yourself.
- If it is genuinely disputed: instruct a solicitor or insolvency practitioner now. A company cannot have a statutory demand "set aside" the way an individual can. Its remedy is an application for an injunction to restrain the creditor from presenting a petition, on form IAA, within 21 days of getting the demand. It goes to the court dealing with insolvency nearest your registered office if paid-up share capital is not more than £120,000, and to the High Court otherwise (gov.uk; s117). If the registered office is in the London insolvency district, winding-up proceedings can only start in the High Court (s117(2A)), so check with your adviser which court applies. Your paid-up share capital is on the Companies House register.
More on this stage: statutory demands against a company.
Track 2: a winding-up petition has been served
The petitioner cannot put the notice in The Gazette until at least 7 business days after serving the company (r7.10). Banks usually freeze company accounts once that notice appears. That is bank practice rather than a rule of law, but it is what normally happens. Before the notice, the petitioner can still withdraw with the court's permission if no one else has joined and the company consents (r7.13). After it, other creditors can join, and paying only the petitioner may not end the matter.
Within 24 hours
- Speak to a Licensed Insolvency Practitioner or an insolvency solicitor today. You can search the official register on gov.uk's find an insolvency practitioner service.
- Treat every payment out of the company as needing a reason. Since the petition was presented, dispositions of company property can be void if a winding-up order is made (s127, s129(2)). If wages or rent must be paid, ask about a validation order. See paying wages after a petition.
- Get the facts an adviser will ask for onto one page: the petition, the debt history, bank balances, a list of creditors with amounts (the creditor list template sets one out), and any charges registered against the company at Companies House.
Within 48 hours
- If the debt can be paid in full with costs: talk to the petitioner about withdrawal before the Gazette notice, and take advice on how to pay it safely given s127.
- If the debt is genuinely disputed: an application to restrain the petitioner from advertising it goes to the court where the petition is pending (r7.24(2)). It needs to be ready well before the notice can appear.
- If the company cannot pay: know which options have already narrowed (table below) and decide with your adviser between a negotiated adjournment, a court application for administration, or a controlled liquidation.
- If you intend to fight the petition at the hearing: the company's witness statement in opposition is due no later than 5 business days before the hearing (r7.16).
Options that narrow once a petition is presented
| Once a petition has been presented | What changes | Where it comes from |
|---|---|---|
| Payments and transfers of company property | If a winding-up order is made, the winding up is treated as starting when the petition was presented, and dispositions of company property since then are void unless the court orders otherwise | IA 1986 s129(2); IA 1986 s127(1) |
| A later resolution to liquidate voluntarily | Only a resolution passed before the petition was presented moves the start date back to the resolution | IA 1986 s129(1) |
| Directors appointing an administrator out of court | Not available while the petition is presented and not disposed of. Administration then needs an application to court | Sch B1 para 25(a); Sch B1 para 12(1) |
| Part A1 moratorium by filing papers | Not available. The directors must apply to court, and the court grants it only if satisfied it would achieve a better result for creditors than winding up | IA 1986 sA3(1); IA 1986 sA4(2), (5) |
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More on this stage: winding-up petitions, the stage-by-stage petition response checklist, and the statutory timeline with every time limit through to the hearing.
Track 3: HMRC says it may close the company
HMRC's own guidance says that if you do not get in touch or cannot agree an instalment plan, it may use collection agencies, take and sell goods, take money from bank accounts, go to court, and close down the company if the tax is a business tax. It also says it will tell you before taking any of these steps (gov.uk). A warning is the point to act, while no court clock is running.
Within 24 hours
- Find every HMRC letter and note which taxes and periods are unpaid: VAT, PAYE, Corporation Tax. Each has its own reference number, and gov.uk says you will need it to set up a plan.
- Check whether HMRC has already served a statutory demand or a petition. If it has, use Track 1 or Track 2 instead. HMRC petitions follow the same rules as any other creditor's.
- Build an honest picture of company income and spending over the coming months. HMRC asks for it, and it tests whether a plan is really affordable. The Time to Pay affordability calculator does the arithmetic.
Within 48 hours
- Contact HMRC with a proposal rather than waiting for the next letter. The Time to Pay letter template sets out what to include.
- Expect the questions gov.uk lists: how you will pay as quickly as you can, whether the proposal is realistic, and what assets such as stock, vehicles or shares could be released first. HMRC may also ask directors to put in personal funds, accept lending or extend credit (gov.uk).
- Before agreeing to any of those, take advice. If the company is already insolvent, new borrowing can create the very personal exposure you are trying to avoid (see wrongful trading), and a plan that pays HMRC while other creditors go unpaid has to be one you can justify later.
More on this stage: HMRC debt, Time to Pay arrangements and the HMRC enforcement escalation timeline.
What not to do in the first 48 hours
Most of the damage in the first two days comes from well-meant steps: paying the loudest creditor, clearing a loan the director guaranteed, moving money to "keep it safe". If the company later goes into insolvent liquidation, a liquidator looks at exactly these transactions.
| In the first 48 hours, do not | Why | Where it comes from |
|---|---|---|
| Pay off one creditor, or a loan you personally guaranteed, ahead of the rest | A payment that puts a creditor, surety or guarantor in a better position in an insolvent liquidation can be reversed as a preference. The desire to prefer is presumed where the person is connected to the company | IA 1986 s239(4) to (6) |
| Sell or transfer assets cheaply, or give them away | A transaction for no consideration, or for significantly less than the company gives, can be set aside as a transaction at an undervalue | IA 1986 s238(4) |
| Assume the look-back is short | 6 months for a preference to an unconnected person, 2 years for a preference to a connected person or any transaction at an undervalue, counted back from the onset of insolvency, and only where the company could not pay its debts at the time or became unable to because of the transaction. For an undervalue transaction with a connected person, that inability is presumed unless shown otherwise | IA 1986 s240(1), (2) |
| Take new credit you doubt the company can repay | A director who knew or ought to have concluded there was no reasonable prospect of avoiding insolvent liquidation or insolvent administration can be made to contribute, unless they took every step to minimise the loss to creditors | IA 1986 s214(2)(b), (3) |
| Keep paying normally after a petition without advice | Those payments can be void if an order follows. Essential payments, such as wages, need a validation order from the court | IA 1986 s127(1) |
| Ignore it | A statutory demand left unanswered for 21 days lets the creditor petition. A petition left unanswered ends in a winding-up order and compulsory liquidation | IR 2016 r7.3; gov.uk |
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If you are worried about decisions already made, the wrongful trading checker and am I personally liable? explain where the lines are. A frozen bank account has its own page: the company bank account has been frozen.
Every deadline in one table
| Deadline | Rule | Where it comes from |
|---|---|---|
| Statutory demand: pay, secure or compound the debt | 21 days from service (the Act says 3 weeks) | IR 2016 r7.3; IA 1986 s123(1)(a) |
| Statutory demand: apply to restrain a petition | Within 21 days of getting the demand, on form IAA, to the court dealing with insolvency nearest your registered office if paid-up share capital is not more than £120,000, otherwise the High Court. A company whose registered office is in the London insolvency district can only be wound up in the High Court | IR 2016 r7.24(1); IA 1986 s117(2), (2A); gov.uk |
| Petition: earliest Gazette notice | Not less than 7 business days after service on the company | IR 2016 r7.10(4)(b) |
| Petition: latest Gazette notice | Not less than 7 business days before the hearing | IR 2016 r7.10(4)(b) |
| Petition: withdrawal by permission | Petitioner applies at least 5 business days before the first hearing, only if the petition has not been gazetted, no notices of support or opposition have come in and the company consents | IR 2016 r7.13 |
| Petition: company opposes | Witness statement in opposition filed and sent to the petitioner no later than 5 business days before the hearing | IR 2016 r7.16 |
| Petition: other creditors join | Notice of intention to appear must reach the petitioner by 4pm on the business day before the hearing | IR 2016 r7.14 |
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Business days exclude weekends and bank holidays. For your own petition dates, the petition timeline tool does the counting.
Methodology and sources
Every rule on this page was read from the current text of the Insolvency Act 1986 and the Insolvency (England and Wales) Rules 2016 on legislation.gov.uk on 24 September 2026, and each is linked where it is used. HMRC's position is quoted from its gov.uk guidance if you cannot pay your tax bill on time, and the statutory demand court route from gov.uk's dealing with your limited company's debts, both read the same day. The 24-hour and 48-hour checklists are our own editorial ordering of those rules into practical steps, not a statutory timetable. The statement that banks usually freeze accounts once a petition is advertised describes common practice, not a legal requirement. The page covers companies registered in England and Wales; Scotland and Northern Ireland have their own procedures. It is general information, not legal or insolvency advice.
The first 48 hours: common questions
I have been served with something. How do I tell whether it is a statutory demand or a petition?
A petition is a sealed court document with a hearing date on it. A statutory demand is a creditor's letter in a set form: it gives no hearing date, and says the company has 21 days to pay and can apply to court for an injunction. If you cannot tell, treat it as a petition until someone qualified has looked at it.
Can I get a statutory demand against my company set aside?
Not in the way an individual can. The procedure for applying to set a statutory demand aside is in the bankruptcy rules, for individual debtors (Insolvency (England and Wales) Rules 2016, r10.4). A company that disputes the debt applies for an injunction stopping the creditor presenting a petition, on form IAA, within 21 days of getting the demand. Rule 7.3 requires the demand itself to tell you about that right.
Can a creditor petition without serving a statutory demand first?
Yes. A statutory demand is one way of proving the company cannot pay its debts. A creditor can instead ask the court to find that the company is unable to pay its debts as they fall due (Insolvency Act 1986, s123(1)(e)). So the absence of a demand does not mean a petition cannot come.
Will the bank freeze the account as soon as the petition is served?
In practice, banks usually freeze company accounts once the petition appears in The Gazette, which cannot happen until 7 business days after service. That is bank practice, not a statutory rule. It reflects the risk s127 creates: payments out after the petition can be void if a winding-up order is made. The days before the notice are the most valuable ones you have.
HMRC has warned it may close the company. Is it too late for Time to Pay?
No rule says it is, and HMRC says it will tell you before it takes action. For company tax debt, HMRC says it will ask how you will pay as quickly as you can, check that the proposal is realistic, expect you to reduce the debt by releasing assets first, and may ask directors to put in personal funds. Take advice before you promise personal money or new borrowing to an insolvent company.
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