The Insolvency Service has published a new five-year strategy setting out how it intends to change the way it supports businesses in financial difficulty, tackles misconduct and works with the insolvency profession.
Published on 29 September 2026, Our vision: moving forward, faster sets out the Agency’s priorities through to 2031.
For directors and insolvency practitioners, some of the most significant themes are:
- a much stronger focus on abusive phoenixism;
- closer working with Companies House and HMRC;
- greater use of data, intelligence and AI;
- continued work on Bounce Back Loan fraud;
- a review of how the insolvency system works for SMEs; and
- a commitment to reduce unnecessary administrative burdens on insolvency practitioners.
The direction of travel is clear.
The Insolvency Service wants to identify problems earlier, intervene faster where misconduct is suspected and make the wider insolvency system simpler and more effective.
A shift towards earlier intervention
One of the central themes of the strategy is moving away from simply dealing with problems once they have already become serious.
The Insolvency Service says that over the next five years it wants to help people, directors and businesses understand their options earlier, before financial difficulties escalate.
That includes clearer information, better signposting and closer working with other organisations such as Companies House and HMRC.
The Agency says it wants directors to have access to trusted information sooner so they can make informed decisions before matters deteriorate.
For company directors, that is an important message.
Seeking insolvency advice does not automatically mean placing a company into liquidation.
In many cases, getting advice early simply means understanding:
- what the company owes;
- whether it can continue trading;
- whether liabilities are increasing;
- what duties directors have;
- whether restructuring is realistic; and
- what insolvency options may become necessary if matters worsen.
Phoenix companies are a major enforcement priority
One of the clearest enforcement priorities in the new strategy is abusive phoenixism.
A phoenix company broadly describes a situation where a business continues through another company after an earlier company fails.
That is not automatically unlawful.
There are many perfectly legitimate circumstances in which a business or its assets can be acquired from an insolvent company and continue trading through another entity.
The problem arises where corporate structures are deliberately abused.
Examples can include directors repeatedly leaving liabilities behind in one company while continuing the same activity through another, or using insolvency and dissolution as part of dishonest or fraudulent conduct.
The Insolvency Service says it is expanding its dedicated Abusive Phoenixism Taskforce to 50 people by 2028. (gov.uk)
The taskforce will work alongside HMRC and Companies House and use improved intelligence and data-sharing to identify potential abuse earlier.
Companies House, HMRC and the Insolvency Service working together
This is probably one of the most important practical developments.
The relationship between the Insolvency Service and Companies House is becoming increasingly intelligence-led.
The strategy says their relationship has moved beyond a largely referral-based model towards one involving:
- shared intelligence;
- stronger data-sharing; and
- coordinated enforcement activity.
The Insolvency Service also intends to work more closely with HMRC and other law-enforcement bodies when identifying serious misconduct. (gov.uk)
That fits with a wider pattern we have already seen during 2026.
Companies House information is increasingly being used as an enforcement tool rather than simply operating as a passive record of corporate filings.
For directors, it means information across different government systems is becoming easier to compare.
What could that mean for director investigations?
When a company enters insolvent liquidation, the conduct of its directors is reviewed.
That can involve looking at issues such as:
- payments to directors;
- overdrawn Directors’ Loan Accounts;
- transactions with connected parties;
- asset transfers;
- payments made to selected creditors;
- HMRC liabilities;
- Bounce Back Loans;
- accounting records;
- dividends;
- use of company funds; and
- the circumstances in which the company continued trading.
Better data-sharing potentially makes it easier for investigators to compare information from different sources.
For example, Companies House filings, insolvency information and HMRC data may together provide a clearer picture of what happened before a company failed.
That does not mean every company failure will result in enforcement action.
There is an important distinction between a business that has failed and misconduct by those running it.
But where misconduct is suspected, the authorities increasingly have more information available to investigate it.
Bounce Back Loan investigations remain important
The strategy also specifically identifies COVID loan abuse as a continuing area of work.
In 2026, the Insolvency Service took responsibility for major Bounce Back Loan fraud investigations previously handled by the National Investigation Service (NATIS).
The Agency says this brought additional cases, intelligence and data into its existing enforcement work and strengthens its ability to tackle more complex fraud. (gov.uk)
For insolvency practitioners, Bounce Back Loan usage has already been a significant area of director-conduct investigation since the pandemic.
The new strategy suggests that this will remain firmly on the enforcement agenda.
Does having a Bounce Back Loan create a problem in liquidation?
Not automatically.
A company having received a Bounce Back Loan does not prevent it from entering liquidation.
Likewise, an inability to repay the loan does not automatically make a director personally liable.
What matters is the surrounding conduct.
Questions may arise around matters such as:
- whether the company was eligible for the loan;
- what information was provided when applying;
- how the funds were used;
- whether the money was used for the economic benefit of the business; and
- whether funds were transferred to directors or connected parties.
Where there are genuine records showing the loan was properly obtained and used for business purposes, those records can be important.
Greater use of data and AI
The strategy also confirms that the Insolvency Service intends to make greater use of data, AI and automation.
The Agency says these technologies will be used to:
- reduce routine work;
- improve services;
- identify risks earlier;
- support better-informed decisions; and
- respond more quickly to changing forms of economic crime. (gov.uk)
This does not mean investigations will suddenly be carried out by artificial intelligence.
Professional judgement will remain important.
But better data analysis can help identify patterns across companies and directors which may previously have been much harder to spot.
Redundancy Payments Service to be modernised
There are also potentially useful developments for insolvency practitioners dealing with employees.
The Insolvency Service has launched a programme to modernise the Redundancy Payments Service.
The stated aim is to improve digital processes, reduce manual handling and make it easier for both claimants and insolvency practitioners to interact with the service.
The Agency says most first redundancy payments are currently made within 11 days, helping around 70,000 people each year. (gov.uk)
For practitioners dealing with RP14, RP14A, RP15 and RP15A information, any genuine reduction in manual administration would clearly be welcome.
Could insolvency practitioners see less administration?
Potentially.
One of the more encouraging parts of the strategy for the profession is the explicit commitment to reduce unnecessary administrative burdens.
By 2031, the Insolvency Service says it wants insolvency processes to be simpler for:
- businesses;
- customers; and
- insolvency practitioners.
It specifically states that unnecessary administrative burdens should be reduced while maintaining high professional standards. (gov.uk)
The Agency also says it will measure the administrative burden placed on businesses and insolvency practitioners as part of assessing whether the strategy is working.
That is significant.
Practitioners have long faced increasingly complex regulatory, reporting and compliance requirements.
Simplification without reducing creditor protections would be a welcome development.
The IPA welcomes the strategy
The Insolvency Practitioners Association has welcomed the new five-year plan.
The IPA said close collaboration between the Insolvency Service, regulators and the profession will be essential.
Its Chief Executive, Marcial Boo, specifically highlighted the importance of:
- improving regulatory consistency;
- reducing unnecessary administrative burdens; and
- strengthening confidence in the UK insolvency regime. (insolvency-practitioners.org.uk)
That suggests the administrative burden issue is likely to remain an important subject as the strategy is implemented.
A review of insolvency for smaller businesses
The strategy also confirms that work has already begun examining how the insolvency system operates for small and medium-sized businesses.
The Insolvency Service says it is exploring changes that could make it quicker and easier for viable SMEs to deal with financial distress before their problems become more serious. (gov.uk)
That could become particularly interesting.
A significant proportion of UK corporate insolvencies involve smaller owner-managed businesses.
The cost and complexity of formal insolvency procedures can therefore be a significant issue.
At this stage, the strategy does not set out a new SME insolvency process.
But the fact that the issue is being actively reviewed is worth watching.
What does this mean for company directors?
The immediate practical message is relatively simple.
Government bodies are becoming increasingly connected.
Information filed with Companies House, information held by HMRC and information arising through an insolvency can increasingly form part of the same intelligence picture.
Directors should therefore ensure that company records are accurate and that transactions can be properly explained.
That is particularly important where a company is struggling financially.
Directors should consider taking advice before:
- transferring company assets;
- repaying themselves or connected parties;
- increasing a Director’s Loan Account;
- paying selected creditors while others remain unpaid;
- declaring dividends;
- starting the same business through another company; or
- continuing to increase liabilities where there is little realistic prospect of paying them.
Taking advice early can help distinguish legitimate commercial decisions from actions which could cause problems later.
Does the strategy mean enforcement will increase?
The clear intention is for enforcement to become earlier, more targeted and more intelligence-led.
The Insolvency Service says it wants to focus resources on behaviour causing the greatest economic harm and identify risks sooner.
That includes:
- abusive phoenixism;
- organised economic crime;
- misuse of corporate structures; and
- COVID loan fraud.
At the same time, the strategy also emphasises proportionality.
Not every failed business involves wrongdoing, and the insolvency regime needs to allow genuine entrepreneurs to move forward following an honest business failure.
What happens next?
The strategy covers the period through to 2031.
Many of the changes will therefore develop gradually rather than happening immediately.
Annual plans will set out more detailed priorities and targets, while annual reports will measure progress against the strategy.
For insolvency practitioners, the areas particularly worth watching are likely to be:
- phoenixism enforcement;
- Companies House and HMRC data-sharing;
- Bounce Back Loan investigations;
- Redundancy Payments Service modernisation;
- insolvency practitioner regulation;
- reductions in administrative burdens; and
- possible changes affecting smaller businesses.
Company experiencing financial difficulty?
One point in the Insolvency Service strategy is something we strongly agree with:
problems are generally easier to deal with when advice is taken earlier.
Taking insolvency advice does not mean committing to liquidation.
At DCA Business Recovery, we provide confidential initial advice to company directors throughout England and Wales.
We can review the position, explain the available options and help directors understand what they need to do next.
If liquidation is appropriate, we can explain the process and likely costs.
If we believe there is a genuine reason why the company should not be liquidated, we will tell you.
You can also get an indication of the likely cost of a Creditors’ Voluntary Liquidation using our online quote tool.
Read the full Insolvency Service strategy:
Our vision: moving forward, faster 2026
Read the Insolvency Service announcement:
Earlier action, faster recovery, tougher on fraud
Read the IPA response:
IPA response to the Insolvency Service five-year strategy
This article is intended for general information only and should not be treated as legal or insolvency advice. The strategy outlines the Insolvency Service’s direction through to 2031 and individual measures may be developed or changed during implementation.
