An Insolvency Service investigation can lead to criminal prosecution where investigators identify evidence suggesting that a criminal offence may have been committed. However, most correspondence about a director’s conduct relates initially to a civil investigation, and receiving an enquiry does not automatically mean that criminal wrongdoing is suspected or that prosecution will follow.
Being contacted by the Insolvency Service is a common concern for directors following a company’s insolvency or dissolution. It does not, by itself, establish misconduct. Directors can identify the nature of the investigation, preserve the relevant records and obtain advice about how to respond.
What happens next depends on the issues being examined. The matter may remain a civil director disqualification investigation, be closed without proceedings, lead to civil enforcement action or result in a separate criminal investigation.
What do the latest Insolvency Service criminal enforcement figures show?
The Insolvency Service enforcement outcomes for 2025/26 record 81 defendants convicted following criminal investigations and charges brought by the agency.
- Of those defendants, 31 were connected with COVID-19 financial support scheme abuse. The publication records defendants rather than directors, so it should not be assumed that all 81 convicted individuals were company directors.
- Sentencing outcomes arising from Insolvency Service investigations included a combined 5,705 hours of unpaid work and 1,304 months of imprisonment, including suspended sentences. Confiscation orders with a combined reported value of £1,901,579 were also recorded.
These totals should not be treated as average sentences. One defendant may have received more than one type of sentence, and the publication does not provide enough individual information to calculate a meaningful average.
The figures cover Great Britain rather than England and Wales alone. They are management information taken from live Insolvency Service administrative systems and may be revised in later updates.
The publication also shows that 199 cases were targeted for criminal investigation during 2025/26. As at 31 March 2026, 197 cases were under criminal investigation, while 117 criminal case investigations had been concluded during the financial year.
These figures are not a simple progression from investigation to conviction. Cases may begin and end in different reporting periods, and one investigation may concern several defendants. The source does not state how many concluded investigations led to charges, convictions or no further action.
Can a director disqualification investigation become a criminal investigation?
Yes. Information obtained during a civil director investigation can lead to a separate criminal investigation where it indicates that an offence may have occurred.
A director disqualification investigation is primarily concerned with whether a person’s conduct makes them unfit to take part in company management. It is generally a civil process under the Company Directors Disqualification Act 1986.
A criminal investigation is different. It concerns whether there is evidence that a specific criminal offence has been committed and whether a prosecution is appropriate.
The two processes can arise from the same underlying events. For example, investigators reviewing company records may identify concerns about the information supplied in a financial support application, the use of company funds or activity undertaken after a director had already been disqualified.
However, a civil investigation does not routinely or automatically become a criminal case. The evidence required, the applicable legal tests and the possible outcomes are different.
The Insolvency Service may investigate and prosecute offences falling within its remit. It may also share information with another authority where the matter is more appropriately investigated elsewhere.
A director should therefore establish what type of enquiry they are facing. A letter requesting information about conduct under the Company Directors Disqualification Act 1986 is not the same as an interview under caution or notification of a criminal investigation.
Our director disqualification guide explains how a civil investigation usually develops and the stages that may occur before court proceedings or a disqualification undertaking.
What is the difference between director disqualification and criminal prosecution?
Director disqualification is a civil protective measure. Its purpose is to prevent a person whose conduct has been found or accepted to be unfit from taking part in company management for a specified period.
- A disqualification order may be made by the court.
- Alternatively, the director may give a disqualification undertaking that is accepted by the Secretary of State. An undertaking has the same practical effect as a court order.
Criminal prosecution concerns an alleged offence. If the offence is admitted or proved in court, the defendant may receive a criminal sentence. Depending on the offence, this could include a fine, unpaid work, a suspended sentence, immediate imprisonment or a confiscation order.
The same person may face both civil and criminal action where the facts support each process. A criminal conviction is not always necessary before a director can be disqualified, and director disqualification does not prevent a later or parallel criminal prosecution.
The processes also apply different evidential standards. Civil disqualification proceedings are determined on the civil standard of proof. A criminal charge must be proved beyond reasonable doubt.
The practical consequences also differ. A director disqualification prevents the individual from acting as a director or becoming directly or indirectly involved in company management without the court’s permission. A criminal conviction may carry a sentence and the wider consequences associated with a criminal record.
It is also a criminal offence to breach an existing disqualification order or undertaking. A disqualified person who continues to manage a company without permission may face imprisonment, a fine, further disqualification and personal liability for certain company debts.
This means that a director facing disqualification should understand the restrictions before agreeing to an undertaking. Our guidance on negotiating a director disqualification undertaking explains why both the wording of the allegations and the practical effect of the restriction require consideration.
What should a director do if criminal conduct may be alleged?
The director should first identify the legal basis on which information is being requested.
Correspondence may relate to a civil conduct investigation, an insolvency office-holder’s enquiries, a criminal investigation or more than one process. The distinction matters because different powers, duties and procedural protections may apply.
Relevant documents should be preserved. These may include company accounts, bank statements, loan applications, board records, correspondence with advisers and evidence showing how company money was used.
Records should not be altered, destroyed or recreated. Where a director cannot remember a particular event, it is usually safer to say so than to provide a speculative answer that later conflicts with the documents.
A director should also avoid assuming that an informal explanation cannot be used elsewhere. Information supplied during one regulatory or insolvency process may be relevant to another investigation, subject to the legal rules governing its use.
The director may have statutory obligations to provide information or cooperate with an office-holder or investigator. At the same time, questions involving possible criminal liability, self-incrimination and legal professional privilege can be complex. The director should understand the basis of the request before providing a substantive response.
Where an interview under caution is proposed, the director should obtain advice about the alleged offence, the evidence disclosed and the available options before the interview takes place.
Taking advice is not an admission of wrongdoing. It allows the director to understand the process and provide an accurate account without making unnecessary or unsupported concessions.
Directors dealing with an initial civil enquiry can read our guidance on responding to early enquiries from the Insolvency Service. The way in which records and explanations are handled at this stage may affect how the matter develops later.
Can a director face disqualification, compensation and criminal proceedings?
A director can potentially face several forms of action arising from related conduct, although each process requires its own legal basis.
The Insolvency Service’s 2025/26 figures separately record director disqualifications, criminal convictions and civil compensation outcomes. This demonstrates that its enforcement work is not limited to imposing director bans.
A disqualification investigation considers whether the director is unfit to participate in company management. A criminal investigation considers whether an offence has been committed. A compensation claim considers whether the conduct for which the director was disqualified caused an identifiable loss to creditors.
These issues may overlap factually, but an outcome in one process does not automatically determine the others.
For example, agreeing to a disqualification undertaking does not itself amount to a criminal conviction. However, the allegations accepted in the undertaking may be relevant to the assessment of compensation risk or another civil claim.
Similarly, a criminal investigation does not necessarily result in a charge or conviction. The Insolvency Service’s published figures do not state how many criminal investigations concluded without further action during 2025/26.
Directors should therefore consider the wider implications before responding to allegations or agreeing the wording of an undertaking. A response prepared solely with the immediate disqualification issue in mind may have consequences in another process.
Where compensation is later sought, our guide to director disqualification compensation orders explains the requirement to connect the disqualification conduct with quantifiable creditor loss.
Receiving Insolvency Service correspondence can be unsettling, particularly where the possibility of criminal action is raised. It does not mean that prosecution is inevitable. The immediate task is to establish the nature of the enquiry, preserve the evidence and respond on a properly informed basis.
Francis Wilks & Jones advises directors in England and Wales on Insolvency Service investigations, director disqualification proceedings and related personal liability risks. We can review the correspondence, explain the process and help directors decide how to respond.
