The number of company directors receiving bans of more than five years has hit a six-year high

 
Shruti Tripathi Chopra
Follow Shruti
Frankie Howerd
Insolvency Service handed out 573 director disqualifications lasting more than five years in 2016 (Source: Getty)

The number of company directors receiving bans of more than five years has hit a six-year high, according to a study by Moore Stephens.

The Insolvency Service handed out 573 director disqualifications lasting more than five years last year, the highest figure since 2010 and 2011.

Disqualified directors are personally liable for the losses of any business they are involved in while disqualified, and may also face criminal prosecution. Disqualifications can last up to 15 years in serious cases.

Read more: HMRC gets tough on finance directors at big firms

The ban comes as part of the Insolvency Services' crackdown on dodgy directors. It is taking a tougher stance on actions including repaying friends and family ahead of other creditors and using company money for personal benefit. ​

Mike Finch, partner at Moore Stephens, said: “The Insolvency Service is now tougher than ever on directors they can prove have broken the rules and left creditors out of pocket.

“This is particularly the case where the taxpayer is left short-changed by a company failing to pay its tax bills. Unpaid debt to HMRC is very easy and cheap to prove, meaning people are much less likely to get away with wrongdoing.

“Directors whose companies are in trouble need to make sure they are not tempted to break the rules in a misguided attempt to save jobs. They are more likely than ever to get found out, and to severely damage their future prospects.”

Related articles