The Insolvency Service will make abusive phoenixing, where directors repeatedly walk away from company debts and set up similar businesses again, its leading enforcement priority under a five-year strategy it launches tomorrow. Some 146 investigations have started since April, with another 87 about to begin.
Duncan Beach, who became chief executive in January after a 20-year career in change management at banks including HSBC and Credit Suisse, said the practice was his main concern.
“It is such a blight on the economy,” Beach said.
He gave the example of a small housebuilder that sells a new home off-plan to a family, closes the business and walks away, then sets up again and repeats the fraud. Another was a small hotel that makes all its staff redundant, shuts the company and reopens the next day under a different corporate structure, free of its liabilities.
“It just feels completely wrong,” he said. “It is not a victimless crime.”
The agency is working with other government bodies, including HM Revenue & Customs, and will seek prison terms for directors it finds acting unlawfully. Rather than waiting for companies to become insolvent, investigators are targeting live businesses where they suspect wrongdoing.
They are using AI to piece together evidence held across different government bodies, including Companies House, which had previously been difficult to bring together. Business Matters reported in July on plans to use AI analytics to find rogue phoenix directors.
The government has given the service an additional £5m a year for five years to create a 50-strong team of investigators focused on abusive phoenixing. The agency’s annual report for 2025-26 records the £25m allocation, made in the 2025 Autumn Budget.
Peter Etherington, of Ilkley, West Yorkshire, was jailed for 18-and-a-half months at Bradford Crown Court on 5 August and disqualified from acting as a director for ten years after repeatedly flouting the law at his publishing business.
David Snasdell, chief investigator at the Insolvency Service, said at the time: “He ran the same business through one phoenix company after another, committing serious misconduct in the process.”
Fraud is the most common reported crime, representing about 40 per cent of all offences measured by the crime survey for England and Wales and affecting more than four million adults a year. “That number is growing so it is a problem. We see it day-in, day-out and it is becoming very visible,” Beach said.
The agency is also pursuing organised criminals operating behind false company identities. Last week the High Court in Manchester wound up seven companies registered in Lancashire, London, Manchester and Reading in the public interest, after the service and Companies House found connections between them.
“This should send a clear message that companies cannot use false filings or misleading information to gain credibility and put other businesses at risk,” said David Usher, another chief investigator.
Beach said he wanted to improve Britain’s risk-taking culture and let entrepreneurs fail and go again without being unduly penalised.
He said some existing insolvency and restructuring tools were “geared towards larger organisations” and could be “quite complex and quite expensive”. The options will include “a new rescue tool specifically tailored to small businesses”, he said.
Beach is also reviewing how insolvency practitioners are regulated. Liability for mistakes when a company enters an insolvency process currently sits with the individual practitioner. Asked whether regulation could shift to firms, he said: “It’s certainly on the slate and I can understand why it’s important for the sector.”
Bob Pinder, director of quality assurance at the Institute of Chartered Accountants in England and Wales, said: “We’d like to see renewed momentum towards a firm-based approach to insolvency regulation, with modern regulation focused on the systems, controls, and culture within firms, while continuing to hold individuals accountable where appropriate.”
Beach said he hoped the Insolvency Service would become better known as a tool for directors running their businesses, not only winding them down. “I want them to understand that the insolvency system is a positive place that gives them confidence to try to take a risk, to do business, to be an entrepreneur,” he said.
