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ToggleWhat do we mean by statutory demand?
A statutory demand is a formal ask for payment from a creditor to a person or business. Even though there’s no need for court action to send this demand, it’s a significant move.
If you get one, you mustn’t just overlook it. Statutory demands usually come before legal proceedings, which might lead to your company being liquidated if you don’t handle it properly.
What are my options if I have been served with a statutory demand?
A statutory demand should be delivered personally by handing it to the person, leaving it at the registered office, or giving it to the company director or secretary.
If it’s not feasible to deliver it in person, it can be sent by post. The demand specifies the owed amount and allows the recipient 21 days to pay or make a suitable arrangement to settle the debt.
If you disagree with this debt, you need to apply to the court within 18 days to challenge the statutory demand. You must provide strong evidence that the debt isn’t valid or have valid reasons to dispute the demand on technical grounds.
The rules on this matter are complex, so it’s wise to get professional advice to determine if you have a genuine chance of challenging the demand successfully.
Statutory demands: Are they issued for companies or individuals?
Statutory demands can be served on individuals and companies depending on who owes the debt. For companies, a statutory demand threatens liquidation, while for individuals, it could initiate personal bankruptcy proceedings.
Whether issued against a company or an individual, the process and consequences are mostly the same.
However, there’s a distinction in the minimum debt levels required for further action to occur:
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- For a limited company, a winding-up petition (WUP) can be filed if the debt goes beyond £750. However, due to the Government’s temporary measures from October 1, 2021, to March 31, 2022, this amount has risen to £10,000. A winding-up petition is when a creditor requests the courts to liquidate your company, asserting it to be insolvent.
- For an individual, bankruptcy can only be petitioned by the creditor if the debt surpasses £5,000.
Understanding How Statutory Demands Related to Limited Companies
A statutory demand can be served on you as an individual only if the debt is yours, not your company’s. Keep in mind, that a limited company is a distinct legal entity, so any debts it incurs belong to the company, not its directors or shareholders.
If your company owes money and a creditor wants to serve a statutory demand, it must be issued to the company, not to any individual director. If you receive a statutory demand for company debts addressed to you personally instead of your company, you’ll need to challenge it initially.
What should I do if I am a sole trader here?
If you’re a sole trader, your business operations are not separate from your personal finances. Any debts incurred in running your business are your personal responsibility.
So, if a business customer wants to issue a statutory demand against you, it will be served on you as an individual. This could lead to bankruptcy if you’re unable to settle the debt.
Read More:
- Understanding Liability for Accountant Mistakes and Poor Advice
- Advice for unregulated finance brokers facing financial penalties
- Are You Liable for the Debts of Your Wife Or Husband’s Company in the UK
- Investing Personal Money into a Company: Advice for directors
- What is the difference between secured and unsecured creditors
Are you worried about your statutory demand? Seek Professional assistance with Vanguard Insolvency!
If you’re facing financial difficulties, whether personally or in your business, seek expert help and advice promptly. If you’ve been threatened with a statutory demand or fear it’s the next step your creditors might take, try to resolve the situation before it escalates.
If you’ve received a statutory demand, it’s crucial to speak with an insolvency practitioner to grasp your situation and plan your next steps.
The team of licensed insolvency practitioners at Vanguard Insolvency can guide you through available options and recommend the most suitable course of action for you.
I am an insolvency professional with a distinguished career specialising in commercial insolvency, adeptly navigating Creditors Voluntary Liquidation, Company Voluntary Arrangements, and Company Administrations. With a comprehensive understanding of insolvency laws and an unwavering commitment to ethical practices.
- David Jacksonhttps://vanguardinsolvency.co.uk/author/david-jackson/
- David Jacksonhttps://vanguardinsolvency.co.uk/author/david-jackson/
- David Jacksonhttps://vanguardinsolvency.co.uk/author/david-jackson/
- David Jacksonhttps://vanguardinsolvency.co.uk/author/david-jackson/