Since 15 February 2022 the Insolvency Service has been able to investigate the former directors of a company that was struck off and dissolved without ever going through liquidation or administration, and to seek their disqualification and compensation for creditors, without first restoring the company to the register. The power comes from the Rating (Coronavirus) and Directors Disqualification (Dissolved Companies) Act 2021, applies to conduct before the Act as well as after, and must normally be used within 3 years of the dissolution.

Why could these directors not be investigated before?

Before the 2021 Act, section 6 of the Company Directors Disqualification Act 1986 (CDDA) only covered directors of companies that had become insolvent, meaning liquidation with a shortfall, administration or administrative receivership. A company struck off by its directors, or by Companies House, never “became insolvent” in that sense, even if it owed money. The explanatory notes to the 2021 Act record that investigating such a director meant first restoring the company to the register, which was time consuming, costly and needed court proceedings.

The same notes describe the complaints that prompted the change: companies dissolved to shed their debts while a new company carried on the same business with the same people, dissolution used to avoid the cost and scrutiny of a formal liquidation, and dissolution used to avoid an investigation of the directors. The notes also say the change was intended to discourage using dissolution to avoid repaying government backed coronavirus loans such as bounce back loans.

What exactly did the 2021 Act change?

Section 2 of the 2021 Act amended the CDDA for Great Britain; section 3 made matching changes in Northern Ireland. The key amendments are:

  • Section 6(1)(a)(ii) CDDA: the court must disqualify a person who has been a director of a company “dissolved without becoming insolvent” if their conduct makes them unfit to be concerned in the management of a company.
  • Section 7(2)(b): the application must be made within 3 years beginning with the day the company was dissolved, unless the court gives permission.
  • Section 7(4): the Secretary of State or the official receiver can require any person to provide information and produce records about a person’s conduct as a director of a dissolved company.
  • Section 15A: a compensation order or undertaking can be sought where a disqualified director’s conduct caused loss to creditors of a dissolved company.

Section 2(14) of the 2021 Act makes the amendments apply to conduct, and to companies dissolved, at any time before as well as after the Act was passed. Section 2 came into force on 15 December 2021 for specified purposes and fully on 15 February 2022.

Which cases will the Insolvency Service take on?

The powers are discretionary. The Insolvency Service’s guidance on dissolved company investigations says the purpose is to protect the public and the business community, not to recover money for creditors, and that complaints are prioritised by the risk of harm. It may investigate where information suggests:

  • corporate abuse, such as very serious misconduct, fraud or scams;
  • the director left the company with unpaid fines or other enforcement action, for example for health and safety, immigration or environmental breaches;
  • a series of companies has been liquidated or dissolved leaving debts unpaid while the business carries on in a new company, often called phoenixism;
  • the director did not follow the rules when applying to strike the company off.

The guidance says it will not usually investigate where the only issue is unpaid debts with no other serious misconduct and no history of previous failures, where the only issue is filing defaults without significant harm or a record of repeated non compliance, where the directors cannot be traced or have no current directorships, or where another body is already dealing with it. The power does not extend to dissolved LLPs, general partnerships, building societies, registered societies, charitable incorporated organisations and certain other bodies. The Insolvency Service’s separate power to investigate live companies under the Companies Act 1985 cannot be used for dissolved companies.

How do the strike off rules feed into this?

Many complaints start with a defective voluntary strike off. Section 1004 of the Companies Act 2006 bars an application if, in the previous 3 months, the company has traded, changed its name, disposed of stock for value or engaged in other activity beyond what is needed to wind up its affairs; making an application in breach is an offence. Companies House guidance adds that within 7 days of applying, the directors must send a copy of the application to members, creditors, employees, pension trustees and any director who did not sign. Concealing the application from those people can lead to up to 7 years’ imprisonment and an unlimited fine. Strike off is described as not an alternative to formal insolvency proceedings.

Breaches of the strike off and filing rules should be reported to Companies House first, which decides whether to pass them to the Insolvency Service. The mechanics of the process are in company strike off using form DS01.

How does an investigation work?

The guidance says an investigation may involve publicly available information, correspondence and interviews with officers and senior employees, review of accounting and other records, and enquiries of creditors, suppliers, employees, accountants, solicitors, banks and HMRC. A case supervisor reviews progress at intervals. If the investigator finds evidence of unfit conduct to the court’s standard, a report goes to an independent team that decides whether to apply for disqualification in the public interest.

Most applications are under section 6, so the 3 year limit from the dissolution date applies. The guidance notes that conduct in older companies can also be put before the court, provided at least one company was dissolved within the 3 year period. Directors, people acting as directors without appointment and shadow directors can all be investigated; see shadow and de facto directors.

What can the outcome be?

  • Disqualification of 2 to 15 years under section 6, by court order or undertaking; see director disqualification.
  • Compensation under section 15A, applied for within 2 years of the disqualification, where the conduct caused loss to creditors.
  • Criminal referral to the Insolvency Service’s criminal investigation team, the police or another agency, since the civil investigators do not prosecute.

In practice the power is used sparingly. The Insolvency Service’s enforcement management information shows 1,044 section 6 disqualifications in Great Britain in 2025/26, of which 3 related to dissolved companies.

What can creditors do themselves?

Because the Insolvency Service does not act to recover debts, the guidance points creditors to their own remedies. A creditor can apply to court to restore the company and then pursue it, and, depending on the size of the debt, can petition to wind it up. A winding up order brings in the official receiver, who must investigate the company’s affairs and report on the directors, which is often a more direct route to scrutiny than a complaint. Before dissolution, creditors can also object to the strike off.

How might this look in practice?

Illustration only. Hazel Ltd owes HMRC and several suppliers when its sole director applies to strike it off. He does not send a copy of the application to the creditors, and a week after dissolution a new company with the same director, premises and vans starts trading. A supplier complains to Companies House, which refers the matter to the Insolvency Service. Because there is a pattern of phoenix trading and a strike off breach, not just an unpaid debt, the Service opens an investigation 14 months after dissolution, uses section 7(4) to obtain the bank statements, and has until 3 years after the dissolution date to apply for disqualification. The supplier, wanting its money, separately considers restoring and winding up Hazel Ltd.

What mistakes do directors make?

  • Believing that dissolution closes the file. The conduct can be investigated for 3 years and the company can be restored.
  • Striking off an insolvent company instead of using a creditors’ voluntary liquidation.
  • Failing to send the DS01 to creditors, HMRC and employees within 7 days.
  • Assuming resignation before strike off avoids scrutiny; former directors are within the power.

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Sources

Reviewed by Christine Anderson, Broker, Solar Protect. Last reviewed 8 October 2026. Part of Accountapedia, the Solar Protect guide to UK tax and accounting. This page is general information, not personalised advice.