The £5,000 creditor threshold
A creditor can petition for your sequestration if you owe them at least £5,000. This is the Scottish equivalent of the English bankruptcy creditor petition threshold.
The petition goes through the sheriff court. You can attend and argue against sequestration — for example by paying, disputing, or proposing an alternative solution.
HMRC as a petitioner
HMRC is one of the most active petitioners in Scotland (as it is in England). They will petition for Self Assessment or PAYE debts of £5,000+ where a Time to Pay arrangement has failed.
HMRC petitions are usually successful because HMRC keeps very clear records.
Alternatives to defending
Pay the debt: stops the petition.
Dispute the debt: requires genuine grounds.
Propose a Trust Deed: courts often adjourn to consider Trust Deed proposals.
Apply for your own sequestration: pre-empts the creditor petition and can be strategically preferable.