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A petition to wind up part of fast-growing North East construction company Merit has been launched by HM Revenue and Customs.

Court filings show the action from the tax authority, taken this week against Merit Group Services Limited. It follows two other winding up petitions from suppliers to the firm earlier this year which were later withdrawn.

Details of HMRC's reasons for the step - which it says typically comes after other options have been exhausted - have so far not been revealed. Officials have said they are acting to protect taxpayers' money.

The petition is a blow for Merit, which has enjoyed success in recent years thanks to its innovative offsite construction methods that have helped it secure work on technically complex projects in the public and private sector. Its Ultra Pod and Flexi Pod technology has been used across the healthcare, bioscience and semiconductor sectors, among others.

It has been heavily involved in the construction of a new hospital in Berwick and its site has been visited by a number of prominent politicians in recent years.

Most recent accounts for Merit Group Services - which is the parent of 16 companies in the Cramlington-based group - cover the year to the end of June 2024, in which it bosses hailed strong results. That came despite a fall in turnover from £88.4m to £79.7m and a fall in operating profit from £7.9m to £6.3m, while pre-tax profits were £5.8m, down from £7.6m.

At the time the 2024 accounts were published, the firm said the numbers reflected a change in the way the business accounts for the use of its intellectual property (IP) and platform, which now sees each subsidiary – Merit Holdings and Merit Health – pay a licence fee for use of this IP.

The former Company of the Year winner at the 2018 North East Business Awards is in the midst of a major expansion of its production facilities in Cramlington, including a planned 250,000 sqft extension to its second factory to support demand.

Bosses have said the extension to the firm's site - which is already said to be one of the largest off-site manufacturing facilities in Europe at 270,000 sqft - will give it the capability to deliver annual turnover of about £450m. It is intended the factory will support work in the º£½ÇÊÓƵ and its plans to export overseas.

A third factory location is also being mulled by the firm, with sites in the º£½ÇÊÓƵ and overseas under consideration. Employee numbers across Merit Group Services grew from 305 to 357 in the firm's 2024 financial year, as it scooped a number of significant new contracts in the healthcare and life sciences sectors.

An HMRC spokesperson said: "We take a supportive approach to dealing with customers who have tax debts and only file winding-up petitions once we’ve exhausted all other options, in order to protect taxpayers’ money.”