The Insolvency Service is stepping up action against directors who misuse company insolvency to leave debts behind and continue trading through a new business. The move forms part of its current enforcement programme and follows £25 million in government funding over five years to create a 50-person Abusive Phoenixism Taskforce.
The task force will focus on suspicious company failures and director misconduct. It also comes as the Insolvency Service strengthens information sharing with HMRC and Companies House.
What Is the Real News?
The key development is that the crackdown is now moving from funding and policy into active delivery. The Insolvency Service confirmed that recruitment planning is under way, with the dedicated task force being built as part of its wider effort to tackle abusive phoenixism.
Its 2026 to 27 Annual Plan also places stronger enforcement against phoenix activity within its current priorities. Recent figures show that enforcement is already significant. During 2025 to 26, the agency completed 148 civil investigations into companies where abusive phoenixism was identified.
A further 64 companies were under civil or criminal investigation at the end of the year. Those cases resulted in 87 director disqualifications, 18 companies being shut down and five directors being convicted of criminal offences.
Who Does This Apply To?
The crackdown is especially relevant to company directors and business owners whose companies are insolvent, close to insolvency or considering a restructure.
Starting another company after a previous business fails is not automatically unlawful. The concern is abusive phoenixism, where insolvency or dissolution is misused to avoid debts, harm creditors or improperly keep assets while business activity continues through another company.
Directors considering a company closure, asset transfer or restructure therefore need to make sure their decisions are properly recorded and supported.
Why Is Scrutiny Increasing?
The Insolvency Service is working closely with HMRC and Companies House. Companies House has also gained stronger powers under the Economic Crime and Corporate Transparency Act 2023.
These include powers to question information, request more evidence, reject filings where there are grounds for doubt, and share information with public authorities, including the Insolvency Service. This creates a stronger enforcement environment where company records and director conduct can be reviewed across government bodies.
What Happens If Directors Ignore the Risk?
The consequences can be serious. Recent abusive-phoenix investigations have already resulted in company closures, director disqualifications, and criminal convictions. Poor records or unclear transactions may also make it harder for directors to show that a restructure or asset transfer was carried out properly.
What Should Directors Do Now?
Directors facing financial pressure should act early. Keep accounting records up to date, record important board decisions, and make sure asset sales or transfers are properly valued and documented. If insolvency is becoming professional, advice should be sought before moving assets, closing a company or starting a new entity.
How Can Lanop Help?
Lanop Business & Tax Advisors supports UK businesses with corporate restructuring, financial control, tax matters and company closure. Lanop’s approach is to review the full business position before decisions are made.
For directors under financial pressure, early advice can help clarify the available options, strengthen financial records and reduce the risk of making the wrong move during a sensitive restructuring process.
