Director’s questionnaire and the section 7A CDDA conduct report

The liquidator’s questionnaire is the primary information-gathering tool for the section 218 investigation. Standard questionnaire content covers:

Company history

• ›Date of incorporation; reason for forming the company.
• ›Director appointments and resignations over the company’s life.
• ›Shareholder structure changes.
• ›Trading history — principal activities, customers, suppliers.

Financial position

• ›When the director first identified the company was in financial difficulty.
• ›What actions the director took in response.
• ›Whether the director took professional advice (IP, solicitor, accountant) — when, from whom, what advice, what action.
• ›When insolvent liquidation became inevitable (the wrongful trading question).
• ›Why trading continued after that point, if it did.

Specific transactions

• ›Payments to directors or connected parties in the 6 months before insolvency.
• ›Asset transfers in the 2 years before insolvency.
• ›Dividend declarations and payments — amounts, dates, source of distributable reserves.
• ›BBL drawing — amounts, purposes, use of funds.
• ›Director loan account movements — drawings, salary, dividend allocations.

Books and records

• ›Status of company accounting records — up to date or in arrears.
• ›Location of records — with the company, accountant, or elsewhere.
• ›Bank statements, sales invoices, purchase records, payroll records.
• ›Cooperation undertaking — confirmation the director will deliver records to the liquidator.

• ›Inconsistency with documentary evidence — answers that contradict bank statements, accounts or other records. The liquidator will identify discrepancies; credibility is undermined for any later defence.
• ›Concealment of transactions — failing to disclose preferences, transactions at undervalue, or asset transfers. Usually discovered anyway; concealment compounds the original issue with misfeasance and obstruction exposure.
• ›Failure to respond — directors who don’t return the questionnaire face increased scrutiny and potential section 235 IA 1986 enforcement (compulsory information requirement).
• ›Combative responses — directors who treat the questionnaire as an attack typically provide less information and attract more scrutiny than those who cooperate constructively.

• ›Be thorough — take time to gather information, check dates and amounts, verify against records. Rushed responses with errors damage credibility.
• ›Be honest — even where the answer is uncomfortable. Honest disclosure of (e.g.) a preference is far better than concealment that’s later discovered.
• ›Be specific — precise dates, amounts, parties. Vague answers (“I don’t recall”, “sometime in 2024”) signal either evasion or poor record-keeping, both of which attract scrutiny.

Where directors don’t know an answer, saying so is acceptable — but where possible, point to where the information could be obtained (the accountant, the bank, the accounting software).

Separately from the questionnaire (which is for the section 218 investigation), the liquidator must file a section 7A CDDA 1986 report with the Insolvency Service on every CVL, administration, and compulsory liquidation. This is mandatory regardless of the director’s conduct — reports are filed even where conduct was exemplary.

The report covers each director’s conduct in the 3 years before insolvency, addressing:

• ›Personal details — name, address, date of birth, occupation.
• ›Directorship history — including other UK directorships, past and present.
• ›Conduct in relation to the failed company — the substantive evaluation.
• ›Specific matters — misfeasance, breach of duties, criminal offences, transactions at undervalue, preferences, fraudulent activity, BBL misuse, Crown debt accumulation, record-keeping failures.
• ›Director cooperation with the office holder.
• ›Other relevant conduct.

The Insolvency Service uses these reports to identify potential disqualification candidates under sections 6–8 CDDA 1986. Most reports do not result in disqualification — they are filed routinely and reviewed. Only where conduct is materially deficient does the Insolvency Service open a disqualification investigation.

Six patterns commonly trigger investigation from the section 7A report — see the card above for the full list. The single biggest is Crown debt accumulation; the second is books and records failure under section 386 Companies Act 2006.

• ›Maintain proper records throughout — bank statements, sales records, payroll, tax filings. The single biggest protection.
• ›Take professional advice early — an IP, solicitor, or insolvency-experienced accountant. Directors who took advice and acted on it are typically protected even where the advice didn’t avert insolvency.
• ›Cease trading when insolvency becomes inevitable — don’t continue to take credit when you know it cannot be repaid. See ‘Wrongful trading’.
• ›Avoid favouring connected parties in the pre-insolvency period — no preferences, no transactions at undervalue, no unusual asset transfers.
• ›Cooperate fully with the liquidator — honest questionnaire responses, prompt delivery of records, attendance at any interviews requested.

For director disqualification framework, see Director disqualification. For wrongful trading, see Wrongful trading. For BBL exposure, see BBL personal liability and BBL misuse — director risk. For the broader director duties framework, see Director duties in financial difficulty.