How to Recover Debt From a Limited Company in the UK

This guide covers commercial debts owed by limited companies

This guide is for UK businesses recovering unpaid commercial invoices from a company. The company identity and Companies House checks are relevant across the UK. The court and pre-action process discussed below focuses mainly on England and Wales. Scotland and Northern Ireland have different court procedures, forms and terminology, so obtain advice in the correct jurisdiction before starting legal action.

The guide does not assume that every overdue balance should go to court. Most viable business debts should first be approached as a commercial recovery problem: identify the debtor, understand why payment has stopped, establish whether the debt is genuinely disputed and choose the step most likely to produce a useful net recovery.

First check: which company actually owes the money?

A trading name, website or email signature is not enough to identify a legal debtor. A business may trade under a name that differs from its registered company name. A group may also contain several companies with similar names, but only one of them entered into the transaction.

Check the following before escalating:

• The full registered company name and company number.
• The name shown on the accepted quotation, order, contract and purchase order.
• The legal entity named on the invoice and statement.
• The registered office and current trading address.
• Whether the customer changed entity during the relationship.
• Whether a parent company, subsidiary or director gave a separate guarantee.
• All invoices, credits, payments and adjustments making up the balance.

If the order was placed by ABC Engineering Limited, the fact that payment was discussed with a director of ABC Holdings Limited does not automatically make the holding company or director liable. Follow the documents and the actual agreement.

What Companies House can tell you

The Companies House register provides free public information including the company’s status, registered office, filing history, officers, charges and recorded insolvency information. It is an essential first check, but it is not a complete credit report and Companies House warns that information on the register should not be treated as comprehensive.

Company accounts are a clue, not a live bank balance

Filed accounts can help reveal scale, net assets, secured borrowing and historic financial pressure. They may also be many months old, abbreviated or prepared before the present payment problem arose. An apparently solvent balance sheet does not prove that cash is available today, while weak historic accounts do not prove that recovery is impossible.

Use the register alongside payment history, current communication, credit information, evidence of trading, known assets and the debtor’s actual response.

Can a director be personally liable for company debt?

Not normally just because they are a director. Company debts are debts taken on in the company’s name. The Insolvency Service confirms that company and personal debts are different. A director is not ordinarily a substitute defendant simply because the company has not paid.

Personal liability may arise where there is a valid personal guarantee or where a court, insolvency office-holder or public authority establishes another legal basis. Examples can include fraud, misfeasance, wrongful trading, acting while disqualified or a specific statutory liability. These are exceptional routes that depend on evidence and law. They should not be assumed from late payment alone.

Check any personal guarantee carefully

A guarantee is not useful simply because a document contains the word “guarantee”. The parties, wording, signature, consideration, scope, amendments and execution requirements may all matter. It may cover only certain orders, a capped amount or obligations arising before a particular date. Obtain legal advice before relying on a disputed or unclear guarantee.

The practical limited company debt recovery process

Rezolva’s Invoice Chaser Email Generator creates a final internal reminder that identifies Rezolva as the intended next stage. It gives the debtor one clear opportunity to pay, raise a genuine dispute or make a satisfactory proposal before professional recovery begins.

When professional debt collection is the better next step

Professional collection can reset a stalled conversation without moving immediately to court. It is particularly useful where the account is commercially important, the evidence is clear and the objective is payment with as little unnecessary damage to the relationship as possible.

Consider placement when:

• Several reminders have produced no meaningful response.
• A promised payment date has passed.
• The company continues to trade but avoids giving a clear position.
• New invoices are becoming overdue while older ones remain unpaid.
• Internal chasing is consuming disproportionate management time.
• The balance is affecting cash flow or increasing insolvency exposure.
• You want an accountable record of correspondence and case activity.

Rezolva’s standard amicable UK commercial recovery commission is 12% of money recovered, subject to the agreed terms. If the instruction produces no recovery, no collection commission is charged. Legal, court and approved third-party costs are separate. Recovered collection costs are applied against the commission, and the client receives the principal and any interest recovered. Recovery cannot be guaranteed.

For a complete explanation, read How Much Does Debt Collection Cost in the UK?

Can interest and recovery costs be added?

For some qualifying business-to-business debts, statutory interest and recovery costs may be available under the Late Payment of Commercial Debts (Interest) Act 1998 and the Late Payment of Commercial Debts Regulations 2013. A contractual interest or costs clause may apply instead. Entitlement depends on the contract, transaction, parties and circumstances.

Rezolva Connect adds late-payment interest and recovery costs when a commercial account is placed and the client confirms the applicable basis. The figures and legal or contractual basis should still be checked. Amounts added to a demand are not guaranteed recoveries, and a court may not award every amount claimed.

Use the Late Payment and Bad Debt Calculator for an initial estimate.

When should court action be considered?

A money claim can be appropriate where the debt is evidenced, the correct company has been identified, pre-action requirements have been met and the likely enforcement outcome justifies the cost. A judgment establishes liability and can order payment, but it does not create money or assets where none exist.

Before issuing, assess:

1. Liability. Can the contract, supply, invoice, due date and balance be proved?
2. The dispute. Has every defence or set-off been addressed with evidence?
3. The defendant. Is the claim against the exact legal company that contracted?
4. Pre-action conduct. Has enough information been exchanged and a reasonable opportunity to respond been given?
5. Solvency and assets. Is there a realistic route to enforce a judgment?
6. Economics. Are the court fee, legal spend, staff time and delay proportionate to the likely net recovery?

A straightforward company debt in England and Wales will usually follow the general Practice Direction on Pre-Action Conduct and Protocols where no specific protocol applies. The separate Debt Claims Protocol generally applies where a business creditor claims from an individual, including a sole trader. Read the detailed Letter Before Action guide before moving from commercial collection into legal recovery.

Rezolva’s Debt Recovery Legal Costs Calculator provides an initial estimate for an undefended money claim. Defended proceedings, hearings and enforcement require separate assessment and approval.

Statutory demands and winding-up petitions

A statutory demand is a formal demand that can precede an application to wind up a company. GOV.UK states that the debtor normally has 21 days to pay or agree terms after receiving one. Winding-up action is an insolvency process with serious consequences, high costs and no assurance that the petitioning creditor will recover its money.

It should not be treated as a more intimidating debt collection letter. Insolvency proceedings exist to address insolvency, not to replace the ordinary trial process for a debt that is genuinely disputed on substantial grounds. Seek legal advice before serving a statutory demand or presenting a petition.

What if the company is already insolvent?

The recovery route changes once a company enters liquidation or administration. Ordinary enforcement may be restricted and the creditor may need to submit details of its claim to the office-holder. Check Companies House, the Gazette and correspondence from the liquidator or administrator, then follow the formal claims process.

Registering a claim does not guarantee a dividend. The amount available depends on assets, secured claims, expenses and the order in which creditors are paid. Provide the statement, invoices, contract and supporting evidence promptly, and keep contact details up to date.

What if the company is dissolved?

A dissolved company no longer exists in the ordinary way, so routine collection and a standard money claim are unlikely to provide a direct solution. Restoration may sometimes be possible, but it involves legal procedure, cost and a careful assessment of whether assets or another useful recovery route exist. Obtain advice before spending more on a dissolved debtor.

What if the director starts another company?

A new limited company is a separate legal person. The old company’s debt does not automatically transfer to the new company or its director because the business appears similar, uses the same premises or serves the same customers. Transactions and director conduct may be investigated in an insolvency, but a creditor needs evidence and a recognised legal route rather than assumption.

Recoverability: signs that strengthen or weaken the account

Four common limited company debt scenarios

Documents to provide when placing the debt

• The exact company name, number, registered office and trading address.
• An up-to-date statement showing all invoices, credits and payments.
• The contract, accepted quotation, purchase order or applicable terms.
• Invoices and evidence of delivery, completion or acceptance.
• Correspondence, payment promises and acknowledgements.
• Every dispute raised and the evidence responding to it.
• Any personal or parent-company guarantee.
• Relevant Companies House, credit or insolvency information.

Explore Rezolva’s commercial debt recovery service, review a client recovery experience or place a debt with Rezolva when you are ready.

Frequently asked questions

Important: This guide provides general commercial information for businesses and is not legal, insolvency, accounting or tax advice. The correct route depends on the contract, debtor, evidence, dispute, jurisdiction, limitation position, solvency, assets and circumstances. Court and insolvency rules, thresholds and fees can change. Obtain advice before starting legal or insolvency proceedings.