UK Insolvency Enforcement: What Credit Teams Need to Know Right Now

If you sell on credit in the UK, you probably only see the insolvency world at the very end of the journey – once the customer has stopped paying, the lawyers are circling and an office-holder is suddenly in charge.

Over the last few days, though, a cluster of regulatory updates has landed that’s worth looking at before things get that far. Taken together, they show a tougher, more joined-up approach to directors, professional regulators and tax enforcement.

Director bans: the temperature is rising

New statistics from the Insolvency Service break down director disqualifications by insolvency procedure over recent financial years.    They confirm that disqualification isn’t a rarity reserved for the most spectacular frauds – it’s a routine outcome when directors abuse creditors, HMRC or public support schemes.

The numbers are substantial: more than a thousand bans in 2024/25, with many sitting in the mid-to-upper tariff bands.    Misconduct ranges from ignoring Crown debts and failing to keep records, through to trading while insolvent and misusing Covid support.

For UK credit managers and finance directors, the message is blunt: you can’t treat every limited company as a clean slate. Patterns of failure and poor conduct matter. If you’re extending six-figure lines to businesses fronted by directors with a trail of dissolved or liquidated entities – especially in the same sector – your credit policy needs a re-think.

Oversight of insolvency professionals under scrutiny

In parallel, Northern Ireland’s Department for the Economy has published an Insolvency Service notice removing the Law Society of Northern Ireland’s recognition as a professional body for insolvency regulation.

On the face of it, this looks like a technical regulatory story. In practice, it affects who can supervise insolvency practitioners, how complaints are handled and where standards are enforced.

If your business has customers, assets or operations in Northern Ireland, there are a couple of angles to watch:

• You may see changes in who regulates the practitioner running a case you’re involved in. It’s reasonable to ask for clarity.
• The move is another sign that regulators want a tighter grip on the insolvency profession – particularly where consumer and creditor outcomes have been weak.

Even if most of your exposure is in England and Wales, you can assume expectations of record-keeping, investigation and creditor engagement are only going one way: up.

HMRC’s petitions: not just a threat in the background

Finally, the Featherstone Rovers story gives a live example of HMRC’s approach to unpaid tax. According to Winding Up Petition Solicitors, the club has obtained an adjournment of an HMRC winding-up petition over a reported £120,000 liability, giving it some breathing space until December.

This is a familiar pattern to anyone who works around insolvency:

• Arrears become entrenched.
• Time-to-pay talks stall or fall over.
• HMRC eventually moves from “nudge” to “petition”.

For trade creditors sitting alongside HMRC, this has serious implications:

• Once a petition is presented, bank accounts may be frozen, and you may find your customer can’t pay you even if they want to.
• Payments made after a certain point can be challenged later, so “getting in quick” at the last minute is not a safe plan.
• The existence of the petition itself can damage the debtor’s ability to trade out of trouble.

If your ledger includes customers who are openly behind with tax, or who always seem to be “waiting for the accountant to sort HMRC”, that should drive your appetite for further credit, not be politely ignored.

Practical steps for UK credit and finance teams

Pulling all of this together, a few practical actions stand out:

1. Build director history into your credit scoring.
   Don’t just check the company; look at the people. Prior disqualifications or a trail of failed entities are risk factors, particularly in higher-risk sectors.
2. Tighten monitoring where HMRC is already in the picture.
   If you know a debtor is in time-to-pay discussions, assume a winding-up petition is a real possibility and adjust credit limits and escalation triggers accordingly.
3. Ask more from insolvency practitioners.
   When you’re a creditor in an insolvency process, ask who regulates the IP, how director conduct is being investigated and what’s being done to maximise realisations. The regulatory climate is on your side here.
4. Sort your own house out early.
   If your business is under pressure, getting proactive advice – from your own IPs, legal team and credit control specialists – is far better than waiting for HMRC or the Insolvency Service to dictate terms.

At Athena Collections, we work with UK businesses who want to stay ahead of this curve: using intelligent, fair but firm collections to resolve issues before they turn into Insolvency Service press releases or HMRC petitions. That protects cashflow, but it also protects relationships and reputations.

The real question is whether your current approach to late payers reflects the enforcement environment we’re now in – or the one we left behind a few years ago.