Insolvency Service describes the repeated behaviour as abusive phoenixism
A director has accepted a 6‑year director disqualification undertaking after the Insolvency Service (IS) found that he failed to pay more than £300,000 in VAT and PAYE across his two fire and security companies. Over the same period, he paid himself almost £400,000, while HMRC received only £5,368. The Insolvency Service described the repeated behaviour across both companies as “abusive phoenixism.”
This case highlights the continued focus on director conduct where significant tax arrears build up and where the same pattern of behaviour is repeated in more than one company.
What the Insolvency Service found
The IS reported that the director used two companies to run up substantial unpaid VAT and PAYE liabilities, while paying himself almost £400,000 from the businesses. Both companies were shut down in 2024 via compulsory liquidation with significant outstanding debts, triggering an IS investigation.
- Company 1: Siamo Fire and Security Limited
Siamo Fire and Security Limited received £942,481 during its trading period of December 2017 to December 2021. The director withdrew £215,870 from the company, while HMRC received only £5,368. VAT arrears reached £113,918, with just two payments made, leaving £112,920 unpaid. PAYE liabilities totalled £90,012, again with only two payments made, leaving £72,618 outstanding when the company ceased trading.
- Company 2: Alex Fire and Security Limited
Alex Fire and Security Limited received £624,322 from February 2022 before its liquidation. The director paid himself £171,325, while no payments at all were made to HMRC. VAT arrears reached £125,265, and PAYE liabilities totalled £23,770, with neither tax ever being paid.
The IS stated that the director repeated the same pattern of non‑payment when moving from the first company to the second, without properly winding up or dissolving the first business. This repeated behaviour led the IS to describe the conduct as abusive phoenixism.
The outcome: 6‑year director disqualification
The director accepted a 6‑year director disqualification undertaking from the Secretary of State for Business and Trade, effective from 14 April 2026.
Kevin Read, Chief Investigator at the Insolvency Service, said:
The director… ‘used the cynical but well-worn tactic of running up debts at one company, walking away, and starting again at another. His misconduct was not short-lived – it lasted for more than six years across two companies.
That is what we mean by abusive phoenixism, and it is deeply damaging. It gives dishonest directors an unfair advantage over competitors who pay their taxes, and it deprives public services of funds they depend on.
We will continue to work with HMRC to identify these individuals and stop them acting as company directors.’
HMRC confirmed that it will continue to work with the Insolvency Service to take action against directors who undermine the tax system.
Neil Davies comments*
Neil Davies, solicitor and director at NDP said:
“This case demonstrates the Insolvency Service’s willingness to take firm action where directors fail to meet their tax obligations, particularly when the same behaviour is repeated across more than one company. Directors should not assume that moving from one company to another will prevent scrutiny of their conduct.
In this case it seems that there could have been no other outcome. However, in our experience, any director facing the prospect of director disqualification should seek specialist advice at the earliest opportunity. Understanding the allegations, preparing evidence and engaging constructively with the Insolvency Service can make a significant difference to the outcome.”
(*Neil is a member of the Advisory Board to the leading text on Director Disqualification law and practice, ‘Mithani on Directors’ Disqualification’, the leading publication on Director Disqualification Law and Practice)
How our Director Disqualification solicitors can help
If you are a director facing an Insolvency Service investigation or the risk of director disqualification, early advice is essential.
Our team acts for directors nationwide and have extensive experience in cases involving unpaid tax, trading conduct and repeated patterns of behaviour across multiple companies. Take a look at some of our testimonials.
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FAQs
What is phoenixism?
Phoenixism is a term used by the Insolvency Service to describe situations where a director allows one company to fail and then starts a new company, often in the same sector. The term is not defined in the Insolvency Act 1986 and is not a statutory offence. It is a descriptive label used when reviewing director conduct.
What is abusive phoenixism?
Abusive phoenixism refers to situations where the Insolvency Service believes that the director has repeated the same harmful behaviour in a new company, to the detriment of creditors or the public purse. In this case, the Insolvency Service used the term because the same pattern of unpaid tax occurred in two companies.
Is phoenixism covered by sections 216 and 217 of the Insolvency Act 1986?
No. Sections 216 and 217 deal with prohibited names – a specific offence relating to the use of the same or similar company name after liquidation. Phoenixism, as used by the Insolvency Service, is a behavioural description, not a statutory concept.
Disqualification in phoenixism cases arises under the Company Directors Disqualification Act 1986, based on findings of unfit conduct.
Can phoenixism lead to director disqualification?
Yes – but only where the Insolvency Service identifies misconduct that meets the statutory test for unfit conduct. Phoenixism itself is not unlawful, but repeated harmful behaviour across companies can lead to disqualification.
Why does the Insolvency Service take unpaid tax so seriously?
Unpaid VAT and PAYE deprive public services of revenue and can give a company an unfair advantage over compliant competitors. The Insolvency Service and HMRC regularly work together in cases involving significant tax arrears.
What should a director do if they are worried about director disqualification?
Seek specialist legal advice immediately. Early engagement, proper preparation and a clear understanding of the allegations can significantly influence the outcome.
