Email David Kirk direct by clicking on his name.

Close this search box.

Directors – How To Avoid Disqualification

Last updated: January 12, 2024

The quick answer

As a company director, if you know the financial position is getting worse it is your responsibility to do something about it.  The longer it goes on the more chance you have of being disqualified as a director.

Disqualification only applies if you were a director or shadow director.

In more detail

avoiding disqualification

When a company goes into liquidation or administration, the insolvency practitioner appointed is under a duty to investigate what happened. A report has to be filed with the Insolvency Service in every case. This report will cover every director or shadow director and their conduct.

If the Insolvency Service deems the director’s conduct was unfit, they will apply for a disqualification order (directors ban) that can last up to 15 years. If you carry on being a director of another company during the period you are banned you may go to prison.

If the Insolvency Service decides to carefully review a company’s insolvency, they will usually visit the liquidator or administrator and review the records. They may also write to third parties to gather more information for a prosecution and disqualification proceedings.

The evidence they are looking for will include:

  • Allowing a company to continue trading when it can not pay its debts.
  • Not keeping proper company accounting records.
  • Not sending accounts and returns to Companies House.
  • Not paying tax owed by the company including VAT, PAYE and Corporation Tax.
  • Using company money or assets for personal benefit.

Directors need to keep on top of the finances of their business and make sure it is profitable. This is particularly important if shareholder/directors take dividends instead of salary to save tax.

It is very important as well to keep accurate records and minutes of meetings especially if those meetings discuss whether to carry on trading or not. You will be asked to justify why you carried on trading if losses continued and the creditors position got worse.

It is always sensible to take professional advice early on as a protective measure.


If your company enters a Company Voluntary Arrangement rather than liquidation or administration you cannot be struck off. There is no investigation and no report to the Insolvency Service on your conduct.

More questions in this section

Author: David Kirk - ACA FABRP
Everything you need can be done online.
No need to meet anyone in person.
We cover all of England and Wales.
Just a quick email to say a heartfelt thank you for your very calm, considered, expert advice regarding my circumstances on Tuesday. Things looked bleak before you explained my options much more clearly, in simple layman’s terms.
Rob Elliott (14th December 2021)



Sign up to our newsletter

Request a callback

Simply fill out the short form below and I will get back to you.

David Kirk Portrait

David Kirk

Licensed Insolvency Practitioner