Increase in Director Disqualifications – to over 1,000 a year 

Company directors have a number of legal responsibilities and failing to fulfil them can lead to serious consequences, including being disqualified as a director.  

The statistics released today (Insolvency Service enforcement outcomes 2025-26 – GOV.UK) show that more directors are being disqualified following Insolvency Service investigations, with over 1,000 now being disqualified every year (alongside an increase in investigations).  

Unsurprisingly, we’re seeing an increase in requests to help and advise those subject to investigations or proceedings. 

Anyone finding themselves subject to director disqualification investigations or director disqualification proceedings, should always seek legal advice as soon as possible to increase the chance of persuading the Insolvency Service to withdraw their allegations and any proceedings. For expert legal advice or support, contact  Richard.Palmer@h-f.co.uk or Ashlea.Brittain@h-f.co.uk.  

Reasons for being banned from being a company director 

Anyone can report concerns regarding a director’s conduct to the Insolvency Service and they may then investigate.  Liquidators or administrators of companies are obliged to lodge a report on the directors’ conduct. 

The Insolvency Service will investigate and consider whether there are any grounds for disqualification. The disqualification can range between 2 to 15 years depending on the severity of conduct.  

Common examples of Unfit Conduct  
  • Allowing a company to continue trading when it cannot pay its debts (wrongful trading) 
  • Misuse/abuse of Covid Loans 
  • Fraudulent transfers of company assets  
  • Failure to maintain accounting records 
  • Not sending accounts and returns to Companies House  
  • Not paying tax owed by the company  
  • Using company money or assets for personal benefit 

This is not an exhaustive list, and one of the clearest is the failure to pay tax. In a recent high‑profile example, former England footballer John Barnes’s company, John Barnes Media Limited, generated more than £440,000 in income yet paid no corporation tax or VAT between 2018 and 2020. Investigators found almost £200,000 in unpaid tax liabilities, leading to Barnes being banned from acting as a director for three‑and‑a‑half‑years. 

Misuse of COVID‑19 Bounce Back Loans has also become a major source of director disqualifications, with investigators uncovering widespread abuse of the scheme. 

In 2024-2025, more than 1,000 directors were disqualified and of those 736 were banned for Covid loan abuse. As a result of this widespread abuse, the Insolvency Service is now taking an increasingly robust approach, fast‑tracking disqualification proceedings and pursuing recovery of misapplied funds. Directors who suspect they may have made errors in their loan application, or who are already under inquiry should seek legal assistance as early as possible. The consequences of inaction can be severe. 

What does Disqualification Mean?  

Put simply, a disqualification order prevents you acting as a director of a company or being involved in the management of a company. It’s not acceptable to appoint another person as a director and continue to direct them in the background and breaches of any disqualification order could lead to criminal prosecutions.  

A disqualification order may also restrict you, for example, from sitting on a Board of a school or lead to disciplinary action if you are a qualified professional. Your details will be published online in the Companies House database and the Insolvency Service’s register of directors, consolidating reputational damage.  

In some cases, disqualified directors can be ordered to pay compensation to victims of the misconduct. 

What to do if subjected to a Director Disqualification Investigation 
  • Early engagement is critical. Responding promptly to initial requests and providing clear, well‑organised supporting evidence can significantly influence how the investigation progresses. 
  • In some cases, it may be advisable to avoid the cost and uncertainty of court proceedings by offering or accepting a Disqualification Undertaking. This allows for negotiation with the Insolvency Service on the period of disqualification and avoids the expense of litigation. 
Final Thoughts 

It is essential for directors to proactively comply with duties under the Companies Act 2006, including maintaining accurate records and ensuring all decisions can be properly justified. If facing potential Directors Disqualification, it’s crucial to seek expert legal advice at the earliest opportunity. Early guidance ensures that written responses to the Insolvency Service are carefully prepared and fully protect your position. 

The government has recently started a consultation on Corporate Civil Enforcement, so the current director disqualification regime is likely to change. 

Our insolvency team is here to help, whether you need support with early communications to the Insolvency Service or guidance at any stage of the process.