If you have already reused a company name after liquidation, that does not automatically mean you have acted dishonestly or that director disqualification will follow. Directors often discover the prohibited name rules only after a new company has started trading, after a customer raises a question, or after contact from a liquidator, creditor, HMRC or the Insolvency Service.
The important point is to understand the risk quickly and take recognised steps to protect your position. The rules on reusing a company name after liquidation are technical, and the outcome often depends on timing, the name used, your role in the old company, whether an exception applies, and whether debts have been incurred by the new business.
This guide explains the position for directors in England and Wales who may already be involved in a new company or business using the same or a similar name after an insolvent liquidation.
At a glance
- A former director can be restricted for five years from being involved in a company or business using the same or a similar name after insolvent liquidation.
- A prohibited name can include trading names, brand names and similar names suggesting an association with the liquidated company.
- If no exception applies, the director may need to stop using the name, change the name, resign from management involvement or apply to court for permission.
- Permission is not generally retrospective, so debts incurred before permission is granted may still need careful legal review.
- The same facts may also raise personal liability, HMRC and director disqualification risks.
What is the immediate risk if a company name has already been reused?
The first question is whether the name being used by the new company or business is a prohibited name. This is not limited to the registered name of the old company. It may include
- a trading name,
- brand name,
- registered trade mark,
- website identity; or
- any similar name suggesting an association with the company that has gone into insolvent liquidation.
The restriction usually matters where a person was a director, whether formally appointed or not, of the liquidated company at any time during the 12 months before liquidation. If that person is then involved in the promotion, formation or management of a new company using a prohibited name within five years of liquidation, section 216 of the Insolvency Act 1986 may be engaged.
The risk is not limited to being named at Companies House. A person may still be concerned in management if they are making decisions, directing others, negotiating with creditors, dealing with customers or otherwise exercising real control. This is why early review is important where the director has stayed involved behind the scenes.
Does using a similar name automatically breach section 216?
Using a similar name does not always breach section 216 of the Insolvency Act.
The name has to fall within the statutory definition of a prohibited name, and one of the exceptions may apply. There may also be factual arguments about whether the new name is sufficiently similar to suggest an association with the old business.
- In many cases, however, directors underestimate how broad the rule can be. If the old company traded under a well-known trading style, used a brand name, or had a website identity that customers associated with the business, changing only the registered company name may not remove the risk.
- Where there is doubt, directors should assess the practical impression created by the new business. The question is not just what appears at Companies House, but whether creditors, customers or the market may reasonably think the new business is connected with the liquidated company.
What should a director do first?
The first step is to establish the chronology. Our team can help you quickly establish information such
- when the old company entered liquidation,
- when the new company was incorporated,
- when it began trading,
- what names it has used,
- whether any business or assets were acquired from an office holder, and
- when creditors or the Gazette were notified.
Any director should also identify their role. The risk may be different for someone who is listed as a director, someone who gives instructions from outside the company, or someone who has no real management role. Emails, bank mandates, customer correspondence, staff instructions, supplier accounts and website records may all be relevant.
If the new business is still using the name, urgent thought should be given to whether the name can be changed, whether management involvement should cease, whether a court application is needed, and whether any debts have been incurred while the name was being used.
Can the problem be fixed by changing the name?
Changing the name may reduce ongoing risk, but it does not necessarily remove earlier exposure. GOV.UK guidance explains that if a director has already started to use a prohibited name, they may remain personally liable for debts incurred using that name until the court grants permission, unless the strict early application route was followed.
A name change also needs to be practical, not just formal. The old name should be removed from public-facing material, including websites, email addresses, stationery, signage, social media profiles, promotional material and the way staff answer calls or describe the business.
A director should avoid assuming that changing the company name at Companies House is enough. If the same trading style remains in use, or customers continue to deal with the new business under the old identity, the prohibited name concern may continue.
Can a director apply to court after the name has already been reused?
A director may apply to court for permission to use a prohibited name during the five-year restriction period. The court permission route is an important option, particularly where there is a genuine business reason for using the name and where safeguards can be put in place for creditors and the public.
However, timing matters. The seven business day application route following liquidation can give temporary protection for a short period while the court considers the application. Where that route was not used and the name has already been reused, permission is not generally retrospective.
This means a later application may help with future trading, but it may not remove liability or breach risk for the period before permission is granted. The application should therefore be prepared carefully, with evidence explaining the business, the proposed role of the director, the position of creditors and why permission is justified.
Can the director become personally liable for the new company’s debts?
Yes, a director can become personally liable for the new company’s debts. This is one of the most serious risks.
- Section 217 of the Insolvency Act 1986 can make a person personally responsible for relevant debts where section 216 has been breached.
- This can include debts incurred by the new company while the prohibited name is being used and while the director is involved in management.
Personal liability under section 217 is fact-sensitive. The timing of the debt, the period of name use, the director’s involvement and any applicable exception all need to be reviewed. A director should not assume that all debts are automatically covered, but equally should not assume that company limited liability will protect them if the prohibited name rules have been breached.
This is why the issue should be considered separately from ordinary commercial risk. A director may think they are trading through a limited company, but section 217 can create a route by which creditors seek recovery personally.
Can already reusing a company name lead to director disqualification?
It can do, but director disqualification is not automatic. The Insolvency Service will usually look at the wider conduct.
Relevant issues may include
- whether creditors were misled,
- whether HMRC debts were repeated,
- whether assets or goodwill were transferred at proper value,
- whether records were kept,
- whether the director cooperated with the liquidator; and
- whether the new company continued the same business without dealing properly with the old company’s liabilities.
The risk is higher where name reuse is part of a wider pattern of abusive phoenixism. A director who has had repeated company failures, unpaid tax liabilities, asset transfers to connected parties or continued informal involvement despite restrictions may face closer scrutiny under the Company Directors Disqualification Act 1986.
A director who receives an Insolvency Service questionnaire or notice of intended proceedings should avoid informal explanations that have not been checked against the documents. The response should be accurate, complete and supported by evidence.
What if HMRC is involved?
Where the old company left VAT, PAYE, National Insurance, corporation tax or other tax liabilities unpaid, HMRC may look closely at the new company. Repeated insolvency involving unpaid tax may also raise separate risks, including security demands and joint and several liability notices.
HMRC claims against directors should be treated as a separate issue from section 216, although the same facts may overlap. If HMRC alleges phoenixism, the director should gather evidence showing how the new business was funded, what assets were bought, whether proper value was paid, how tax compliance is now being managed and whether independent insolvency or tax advice was taken.
Where HMRC raises joint and several liability, the analysis should include the Finance Act 2020 regime, the relevant tax liabilities, the director’s connection to the companies involved and any review or appeal rights. This issue is covered in more detail in our guide to HMRC phoenixism and joint and several liability notices.
What evidence can help protect the director’s position?
The most useful evidence is usually practical and contemporaneous. It may include an independent valuation of assets, sale documents from the liquidator or administrator, creditor notices, Gazette publication evidence, board minutes, funding records, advice from an insolvency practitioner, Companies House filings, tax payment records and communications with creditors.
- Where the issue is name similarity, evidence about how the new company presented itself can also matter. This may include website screenshots, email signatures, invoices, advertising, social media pages, signage and customer communications. If the name has been changed, records should show when and how the old name was removed.
- Evidence of improved governance can also help. This may include new accounting systems, separate bank accounts, different trading terms, tax compliance controls, written role descriptions and clear records showing who makes management decisions.
What should a director avoid doing?
A director should avoid giving incomplete explanations, backdating documents, continuing to trade under a name without checking the position, assuming the liquidator is responsible for the notice procedure, or relying on informal advice that has not considered section 216.
They should also avoid continuing to manage the new business through another person if they are concerned that they may already be in breach. Using a spouse, employee, consultant or nominee director does not necessarily remove risk if the former director remains the person making decisions.
The safest course is to pause, gather the documents and take advice on the immediate options. Depending on the facts, this may involve changing the name, ceasing management involvement, applying to court for permission, responding to a liquidator or creditor, or preparing for an Insolvency Service investigation.
How can FWJ help?
FWJ advises directors on phoenix company concerns, prohibited name rules, personal liability and director disqualification proceedings. We can help establish whether section 216 applies, whether an exception may be available, whether section 217 personal liability is a realistic risk and how to respond if the issue has already arisen.
We also advise where name reuse overlaps with company liquidation, HMRC arrears, asset purchases, liquidator concerns or Insolvency Service enquiries. The aim is to understand the facts clearly, reduce avoidable exposure and put forward a practical, evidenced position.
