Insolvency Advice for UK Directors

Two statutory frameworks anchor director-level analysis in any UK insolvency context. Section 123 IA 1986 sets the cash-flow and balance-sheet tests that define when a company is technically insolvent — the trigger point at which directors' duties shift from shareholder-focus to creditor-focus under the Supreme Court's BTI v Sequana [2022] UKSC 25 decision. Section 214 IA 1986 sets the wrongful trading framework — the principal personal-liability mechanism where directors continue trading after the point at which insolvent liquidation became unavoidable.

Together these two frameworks govern what directors must do, when they must do it, and what personal exposure follows from getting it wrong. Almost every spoke in the advice cluster references back to this foundation; engaging with it early is what preserves the section 214(3) "every step" defence and reduces the operational uncertainty around board decisions in the period running up to procedure.

HMRC is the most common creditor in UK corporate insolvency and the most structured in its enforcement. Unlike trade creditors, who pursue debts informally and intermittently, HMRC operates on defined timelines: reminders within weeks of a missed payment, Debt Management contact within months, Field Force visits and security demands within months of that, and statutory demand and winding-up petition for cases that escalate. The progression is largely automated for smaller arrears and manually managed for larger or more complex cases.

The questions are also genuinely technical: secondary preferential creditor status (since 1 December 2020 under the Finance Act 2020) affects recovery economics in any subsequent procedure; Personal Liability Notices under section 121C SSAA 1992 create director-personal exposure on PAYE matters that does not exist for VAT or corporation tax; Notices of Requirement to Give Security carry criminal liability under section 72(11) VATA 1994.

Time to Pay arrangements are the principal first-line response to HMRC arrears where the company is illiquid but the underlying business is viable. The cash-flow forecast that anchors a successful TTP application is the most action-stage topic in the advice cluster — searchers reaching this content are typically preparing the document under time pressure. Most TTP applications are made by the company directly through HMRC's Business Payment Support Service; our role is strategic advisory rather than application execution.

The director's loan account / section 455 CTA 2010 framework is the parallel personal-tax topic. Overdrawn DLAs carry a 33.75% section 455 charge (rising to 35.75% from 6 April 2026), and in liquidation become a debt of the director recoverable by the office holder. The intersection between the section 455 charge, the section 458 refund procedure, and the DLA's status in insolvency is where most generalist content fails.

Where the company is insolvent (cannot pay all debts in full), the choice between formal procedures depends on the underlying business viability, the urgency required, and the wider creditor position. The principal procedures:

• Company Voluntary Arrangement — where the underlying business is viable but legacy debt across multiple creditors is unsustainable. The CVA restructures debt over 3–5 years and binds all unsecured creditors.
• Administration — where rescue is needed and the Schedule B1 moratorium against creditor enforcement is essential to protect going-concern value during a sale or restructuring process.
• Creditors' Voluntary Liquidation — where the underlying business is not viable. CVL closes the company in an orderly way under director control, with HMRC ranking as secondary preferential for VAT/PAYE/NICs/CIS arrears.
• Members' Voluntary Liquidation — the solvent route used to close a profitable company tax-efficiently. Business Asset Disposal Relief eligibility and the £25,000 capital-treatment threshold drive most decisions.

The two comparison spokes below address the procedural decisions directors actually face — administration vs CVL for distressed companies, and MVL vs strike-off for solvent closures. The statutory demand spoke covers the creditor side of the bankruptcy framework where directors are pursuing personal-guarantee debts or other unpaid debts owed by individuals.

• First conversation. A licensed insolvency practitioner (not a call centre and not a paralegal) speaks with the director directly. We assess the position — which framework applies, current enforcement stage, director-personal exposure considerations, wider creditor position, and the realistic options.
• Strategy recommendation. Where Time to Pay is the right answer, we explain why and how to structure the application. Where formal procedure is appropriate, we work through the comparison between CVA, administration, and CVL. Where the position can be resolved through refinancing, settlement, or no procedure at all, we say so.
• Execution. Where formal procedure is required, the IP who speaks with the director at first conversation handles the case through to final report. No call centres. No handoffs. One licensed practitioner, start to finish.

The advice cluster is reference material — it covers the framework and signposts the spoke topics where procedural detail lives. The first conversation does the case-specific work: applying the framework to the company's actual position, identifying the personal-exposure dimensions, and outlining the realistic routes through.

If your company is in financial distress, facing HMRC enforcement, or you want practitioner-led advice on director duties or procedural choice, the first step is a conversation with a licensed practitioner. The conversation will identify which framework applies, test whether informal options remain or whether formal procedure is required, and outline the procedural and director-exposure implications. There is no charge for the initial consultation and no obligation arising from it. Confidentiality is absolute.

At IQ Insolvency, every engagement is led by a licensed insolvency practitioner from the first conversation. The IP you speak to assesses the position and (where formal procedure is needed) executes it. No call centres. No handoffs. One licensed practitioner, start to finish.