FOI release

FOI22/23-152 - Data on disqualifications

Updated 30 May 2023

Our ref: FOI22/23-152

Date: 22 March 2023

Re: Freedom of Information Act (FOIA) Request

Thank you for your email of 22 February in which you requested from the Insolvency Service:

“For the purposes of an article on the Act and related matters I’m writing to make a Freedom of Information to the Insolvency Service on the implications of the Act one year on.

“Please can you treat this email as such and pass to the correct person / team to respond. Thank you.

“To assist, specifically I would be interested to understand:

• a comparison between the last 12 months in terms of director investigations and disqualifications compared to the previous say 5 years (so just beyond the pandemic).
• the (average) penalties imposed – fines and sentences – on cases prosecuted
• the specific number of investigations under the Act
• the typical defences raised
• Does the Insolvency Service have a specific team investigating breaches of the legislation? Would a team member be prepared to communicate with me in general terms?
• Any other general observations that can be provided?”

Your request has been dealt with under the Freedom of Information Act 2000 (FOIA).

I can confirm the agency holds partial information in response to your request.

Under section 16 of the Act (Advice and Assistance) you may find it useful to note:

The Rating (Coronavirus) and Directors Disqualification (Dissolved Companies) Act (the Act), which received Royal Assent in December 2021 extended the Insolvency Service’s powers within the Company Directors Disqualification Act 1986 (CDDA), on behalf of the Business Secretary, to investigate and disqualify directors of companies that have been dissolved without first entering into formal insolvency proceedings. The amendments made by the Act have effect in relation to conduct of directors of companies occurring, and in relation to companies dissolved, at any time before, as well as after, the passing of the Act.

Questions 1 and 3

You requested a comparison between the last 12 months in terms of director investigations and disqualifications compared to the previous say 5 years, and the specific number of investigations under the Act.

No investigations were carried out under the Act. However, I have provided information regarding our CDDA investigations.

Period Number of CDDA investigations commenced1	Of which relate to dissolved company investigations	Number of S6/ S8 disqualifications obtained1,3	Of which are dissolved companies
Y/E 31.03.2019	1,750	Not applicable2	1,185	Not applicable2
Y/E 31.03.2020	1,900	Not applicable2	1,242	Not applicable2
Y/E 31.03.2021	1,485	Not applicable2	962	Not applicable2
Y/E 31.03.2022	1,702	43	760	Nil4
Year to 28.02.2023	1,894	119	812	24

Things to note:

1 An investigation is into the conduct of one or more directors in relation to one or more companies; the figures for director disqualifications are the number of individual directors disqualified.

2 The Act received Royal Assent on 15 December 2021. Thus there are no figures for previous years.

3 Depending on the time required to investigate and pursue director disqualification where appropriate, a disqualification may be obtained in the year in which an investigation is commenced or in a subsequent period.

4 The Act received Royal Assent in December 2021. Given the time taken to investigate a case and pursue director disqualification where appropriate, no disqualifications were achieved in this period.

Question 2

“the (average) penalties imposed – fines and sentences – on cases prosecuted”

The above powers to investigate are civil and not criminal. If it seems that a company or its officers may have committed criminal offences or other regulatory breaches, the case may be referred to our Criminal Investigation Team, the police, a regulator or other investigation agency. It is for that body to decide whether it is appropriate for them to carry out any further investigation. This does not prevent the civil investigator including details of the unfit conduct in any civil action we may take.

The Insolvency Service is not obliged to provide you with a separate copy of information it holds where that information is reasonably accessible to the applicant by other means than the FoIA.

In this case, the information regarding our civil and criminal outcomes you have requested is accessible by the general public on GOV.UK at

www.gov.uk/government/statistics/insolvency-service-enforcement-outcomes-monthly-data-tables-202223.

The agency is therefore not required to provide you with a separate copy of this information and these elements of your request are (to that extent) refused.

Question 4

“the typical defences raised”

The Insolvency Service does not collate this information. Any defence would be specific to the individual case and not grouped into themes.

Question 5

“Does the Insolvency Service have a specific team investigating breaches of the legislation? Would a team member be prepared to communicate with me in general terms?”

After the Act received Royal Assent on 15 December 2021 the Insolvency Service set up pilot teams to receive, consider, target and investigate complaints about the conduct of the former directors of dissolved companies and bring disqualification proceedings where appropriate. This work is currently being integrated into our ongoing operations.

If, having read this response and the information available online, you require further information then please clarify the information you are seeking, and the Insolvency Service will consider your request.

Question 6

“Any other general observations that can be provided?”

Further information regarding the Rating (Coronavirus) and Director Disqualification (Dissolved Companies) Act 2021 is available online including:

www.gov.uk/government/news/crackdown-on-directors-who-dissolve-companies-to-evade-debts

https://insolvencyservice.blog.gov.uk/2022/10/19/new-investigative-powers-enforcement-success-thanks-to-teamwork/.

You can find more information about the Insolvency Service’s investigation and enforcement work on our website at:

www.gov.uk/insolvency-service/investigation-enforcement.

Information about our dissolved company investigations is at:

www.gov.uk/insolvency-service/dissolved-company-investigations.

Information about our enforcement work is available in our published enforcement outcomes at:

www.gov.uk/government/statistics/insolvency-service-enforcement-outcomes-monthly-data-tables-202223.

Further information regarding our investigation work is available at: www.gov.uk/government/publications/insolvency-service-corporate-scorecard-summaries.

Complaints

If you are not satisfied with the response we have provided you and would like us to reconsider our decision by way of an internal review (IR), please contact our Information Rights team within 40 working days of this letter at [email protected] or by post at:

Information Rights Team

The Insolvency Service

3rd Floor

Cannon House

18 Priory Queensway

Birmingham

B4 6FD

United Kingdom

You also have the right to contact the Information Commissioner’s Office (ICO) if you wish for them to investigate any complaint you may have regarding our handling of your request. However, please note that the ICO is likely to expect an IR to have been completed in the first instance.

Kind regards

Information Rights Team

The Insolvency Service

The Department for Business and Trade, Official receivers and the Adjudicator are Data Controllers in respect of personal data processed by the Insolvency Service. For the details about how personal data is processed by the agency, please see the full Insolvency Service Personal Information Charter here: https://www.gov.uk/government/organisations/insolvency-service/about/personal-information-charter