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When a company enters liquidation, its directors must provide the liquidator with the company's books, records, paperwork and any other information reasonably required to deal with its affairs.
This obligation is much wider than handing over the latest annual accounts. The liquidator may require accounting software, bank statements, invoices, contracts, payroll information, tax records, emails, asset documents and access to the company's electronic systems.
Directors should not delete information, close software accounts or dispose of paperwork simply because the company has stopped trading. Records that appear unimportant may be needed to collect outstanding debts, establish ownership of assets, verify creditor claims or explain transactions that took place before liquidation.
When a liquidator is appointed, the directors no longer control the company or its assets. They must hand over the company's records, provide information when requested and attend meetings or interviews where necessary. (GOV.UK)
Molly Monks F.I.P.A of Parker Walsh, a licensed Insolvency Practitioner, regularly advises directors preparing for a Creditors' Voluntary Liquidation and helps them understand what information will be required.
This article principally considers the position in England and Wales.
The phrase "books and records" does not refer only to formal accounting books or documents kept in paper files.
It covers the information needed to show what the company owned, what it owed, what it was owed, how money moved through the business and how the directors managed its affairs.
The records may be held in filing cabinets, on office computers, in accounting software, within cloud storage, on company email accounts or on a director's personal telephone or laptop. Company records can legally be kept electronically, provided the information is adequately recorded and capable of being reproduced. (Legislation.gov.uk)
The fact that information is held electronically does not make it any less important. In many modern liquidations, access to cloud-based systems, email accounts and online banking records is more useful than the physical paperwork.
The liquidator must establish the company's financial position and take control of its assets. They will need to identify money owed to the company, confirm liabilities, deal with employees, review transactions and report to creditors.
The records may also be needed to determine why the company failed and whether any assets or funds were transferred before liquidation.
The liquidator is required to submit a report on the conduct of those who acted as directors during the relevant period before insolvency. This is a standard requirement in an insolvent liquidation and does not mean that misconduct is automatically suspected. (Legislation.gov.uk)
Complete records allow the liquidator to understand the company's position more quickly. Where the records are missing or disorganised, further enquiries may be required and the liquidation can become more complicated.
The director should provide access to the company's complete accounting records.
This will commonly include the company's bookkeeping software, nominal ledger, trial balance, sales ledger, purchase ledger, journals and bank reconciliations. Copies of annual accounts, management accounts, draft accounts, budgets, forecasts and working papers should also be provided.
The Companies Act 2006 requires every company to maintain adequate accounting records. Those records must be sufficient to show and explain the company's transactions and disclose its financial position with reasonable accuracy. (Legislation.gov.uk)
Where the company uses software such as Xero, QuickBooks, Sage or another online platform, the subscription should not be cancelled before the records have been secured. The liquidator may require administrator access, a complete backup and exports of the ledgers and transaction history.
Providing only a PDF of the latest accounts is unlikely to be sufficient. The liquidator may need to examine individual transactions and supporting documents rather than relying on a summary prepared at the end of the year.
Directors should provide records for every bank account used by the company.
This includes current accounts, deposit accounts, foreign currency accounts, loan accounts and any account that has been closed. Statements should cover the period requested by the liquidator and should ideally be provided in both PDF and spreadsheet format where available.
The liquidator may also require cheque books, paying-in books, bank correspondence, loan statements, business credit card statements and details of standing orders and direct debits.
Records from payment processors and online platforms are equally important. This may include PayPal, Stripe, SumUp, Worldpay, Shopify Payments, Amazon, eBay or any other service through which the company received or made payments.
Where company transactions passed through a director's personal bank account, the relevant personal statements may need to be provided. This does not give the liquidator a general right to examine every aspect of the director's personal finances. However, the transactions involving company money must be identified and explained.
Directors should disclose the use of a personal account rather than waiting for the liquidator to discover it through other records.
Outstanding customer debts are company assets and must be disclosed to the liquidator.
Directors should provide the sales ledger, customer invoices, contracts, purchase orders, delivery records and correspondence showing what work was completed and what remains unpaid.
The liquidator will also need to know whether any customer disputes exist. Relevant emails, complaints, credit notes, refund requests and explanations of incomplete work should be provided.
A debtor list should identify the customer, the amount outstanding, the invoice date, the nature of the work and the director's view of whether the debt is recoverable. The director should also explain whether the customer has raised a valid defence, made a counterclaim or alleged that the work was defective.
Work in progress may also have value. The liquidator should therefore be told about work completed but not yet invoiced, retentions, staged payments, accrued income and contracts under which a final invoice has not been raised.
Directors must not redirect money owed to the insolvent company into a personal account or a new company. Payments for work completed by the old company normally remain assets of that company.
The liquidator will require information about everyone to whom the company owes money.
This includes supplier invoices, statements of account, loan agreements, finance documents, rent arrears, utility bills, professional fees and correspondence from debt collectors or solicitors.
The purchase ledger should be reconciled as far as possible. Where a balance is disputed, the director should provide the supporting correspondence and explain why the company does not accept the amount claimed.
The records should also identify any creditors who may hold security over company assets. Copies of debentures, charges, hire-purchase agreements, leasing contracts and invoice finance facilities should be provided.
Personal guarantees should be disclosed where they are known to exist. Although a personal guarantee is normally an agreement between the creditor and the individual guarantor, it may help explain why particular payments were made before liquidation and whether the company's remaining funds were used to reduce a director's personal exposure.
The liquidator will need a complete picture of the company's tax position.
Directors should provide Corporation Tax returns, VAT returns, PAYE records, Real Time Information submissions, Construction Industry Scheme records and any other tax documents relevant to the company.
Correspondence with HMRC should also be retained. This may include Time to Pay negotiations, assessments, penalties, compliance checks, VAT enquiries, enforcement notices and winding-up correspondence.
The records should show which returns have been filed, which remain outstanding and whether HMRC's balance agrees with the company's own accounting records.
Government guidance states that company accounting records should include all money received and spent, details of assets, debts owed by and to the company, stock records, invoices, receipts, bank statements and relevant correspondence. (GOV.UK)
An accountant may hold some of the tax records, but the director should not assume that the liquidator will obtain everything automatically. The accountant's contact details should be provided and the director should authorise the release of the company's information.
Where the company employed staff, the director should provide complete payroll and employment records.
These records may include employee names and contact details, contracts of employment, start dates, pay rates, payroll reports, payslips, PAYE submissions, holiday records, pension information and details of any deductions.
The liquidator will need to establish whether employees are owed wages, holiday pay, notice pay, redundancy pay or expenses. Accurate information is important because employees may be entitled to submit claims to the Redundancy Payments Service.
The director should also disclose recent resignations, dismissals, redundancies, disciplinary matters and employment tribunal claims.
Where employees transferred to another company or continued working for a connected business, the liquidator should be given the relevant communications and agreements. This may be important when considering whether TUPE applied or whether the old company remained responsible for any employment liabilities.
The director must give the liquidator details of everything the company owns or may have an interest in.
The fixed asset register should be provided together with purchase invoices, finance agreements, maintenance records and information showing where the assets are located.
This can include vehicles, machinery, tools, computers, office furniture, stock, plant, specialist equipment and items held at employees' homes or at third-party premises.
Vehicle documents, including registration documents, finance agreements and insurance records, should be handed over. For leased or financed assets, the relevant lender or finance company should be identified.
Stock records should include recent stock counts, purchase prices, locations and details of any damaged, obsolete or customer-owned goods. Where suppliers may claim goods under retention-of-title terms, their contracts and invoices should be provided.
The liquidator should also be told about assets that have been sold, transferred, scrapped or removed shortly before liquidation. The director should provide the sale invoice, valuation, evidence of payment and details of the purchaser.
The obligation is not limited to physical assets. Websites, domain names, trademarks, copyright, customer databases, telephone numbers, software, licences and other intellectual property may also belong to the company and should be disclosed.
Where the company occupies premises, the liquidator will require a copy of the lease, licence or tenancy agreement.
The director should provide details of the landlord or managing agent, the rent position, any deposit paid, service charges, business rates and dilapidations claims.
The liquidator should also be told where keys, alarm codes and access passes are held. If company property remains at the premises, arrangements may be required to inspect and secure it.
Insurance policies should be retained, including public liability, employer's liability, motor, property, professional indemnity and legal expenses insurance.
A historic policy may remain relevant where a claim relates to events that took place before liquidation. It should not be assumed that the policy has no value merely because trading has stopped.
The company's statutory and constitutional records should be provided.
These may include the certificate of incorporation, articles of association, registers of directors and shareholders, share certificates, records of people with significant control, board minutes and shareholder resolutions.
Records of dividends, share issues, share transfers and changes in ownership should also be retained.
The director should provide copies of any shareholders' agreements, investment agreements, debentures, indemnities and documents relating to loans or mortgages secured against company assets.
Government guidance confirms that companies must maintain records concerning shareholders, resolutions, debentures, indemnities, share transactions and secured lending. (GOV.UK)
Companies House records may show some of this information, but they do not replace the company's internal statutory books and supporting documents.
The liquidator should receive copies of all material contracts entered into by the company.
This may include customer and supplier contracts, leases, franchise agreements, agency agreements, distribution arrangements, licences and maintenance contracts.
Legal correspondence should also be disclosed. This includes claims made by or against the company, threatened proceedings, court orders, settlement agreements and correspondence with solicitors.
The director should identify any live litigation, limitation deadlines or hearings. A potential legal claim may be an asset of the company, while proceedings brought against the company may create a liability that the liquidator needs to assess.
Documents should not be withheld merely because they appear commercially sensitive. The liquidator can consider how confidential material should be handled.
Special issues can arise with legally privileged advice, particularly where the advice was given to the company rather than the director personally. The director should preserve the documents and tell the liquidator that they exist rather than deciding unilaterally that they need not be disclosed.
The liquidator will usually examine the company's dealings with its directors.
Records relating to a director's loan account should therefore be provided in full. This may include ledger entries, expense claims, dividend vouchers, salary records and evidence of money introduced into or withdrawn from the company.
If the accounts show that a director owes money to the company, the liquidator will need to understand how the balance arose and whether it is recoverable.
The director may believe that some transactions were wages, expenses, dividends or repayments of money previously introduced. Supporting documents will be needed. A description entered into the bookkeeping system is not always enough to establish the legal nature of a payment.
Where more than one director is involved, separate records should be maintained for each person.
Company emails can form an important part of the books and records.
The liquidator may need communications with customers, suppliers, employees, lenders, HMRC, accountants and professional advisers. Emails can help establish the terms of an agreement, explain disputed transactions or identify assets and liabilities that do not appear in the accounts.
Directors should preserve company email mailboxes and should not delete messages after deciding that the company will enter liquidation.
Access may also be required to shared drives, cloud storage, customer relationship management systems, payroll software, document-management platforms and messaging accounts used for company business.
Where business was conducted through WhatsApp, text messages or a director's personal email address, the relevant company communications may need to be retained and provided.
The liquidator is not automatically entitled to unrelated private conversations. The director should, however, work with the liquidator to separate genuine personal material from company records rather than refusing access to the entire device or account.
The liquidator may require access to systems that contain company information or control company assets.
This can include accounting software, company email, cloud storage, websites, domain name accounts, online marketplaces, payment processors and social media accounts used by the business.
The director should provide company login credentials, recovery details and information about multi-factor authentication. Where access depends on a director's personal telephone, arrangements should be made to transfer the authentication method or provide supervised access.
Directors should not normally be expected to disclose a password that also provides access to unrelated personal information. Instead, company data and accounts should be separated, transferred or exported in consultation with the liquidator.
Subscriptions should not be cancelled until the liquidator confirms that the records have been preserved. Once a subscription ends, access to historic data may be lost or become expensive to restore.
Using a personal device for company business does not turn the company's records into personal property.
Where company invoices, emails, contracts, photographs or other documents are held on a director's laptop or telephone, those records should be preserved and provided.
This does not necessarily mean that the physical device must always be surrendered permanently. The liquidator may instead arrange for the relevant data to be copied or for the device to be examined in a controlled manner.
The director should not attempt to wipe or reset the device before the company information has been secured. Doing so could destroy evidence and create concerns about the director's cooperation.
A director's duty is not satisfied merely by telling the liquidator that the accountant has the records.
The director should provide the accountant's details, explain what information they hold and give the necessary authority for the records to be released.
Accountants and bookkeepers may hold annual accounts, tax returns, payroll information and bookkeeping backups. However, they may not hold customer contracts, company emails, asset records or all supporting invoices and receipts.
The company may also owe the accountant money. Questions can sometimes arise regarding access to documents and whether the accountant claims a right to retain particular records. The director should disclose the position promptly so that the liquidator can deal with it.
The director should not delay the handover while attempting to resolve every outstanding accounting issue personally.
Company records may be held by former employees, consultants, outsourced payroll providers, IT companies, storage facilities or another business in the same group.
The director should identify each person or organisation that may hold company information and provide their contact details.
Government guidance for compulsory liquidations expressly requires directors to tell the Official Receiver where another person is holding company assets or trading records. (GOV.UK)
The liquidator has statutory powers to seek company property, books, papers and records from people who have possession or control of them. A court may order those materials to be delivered to the office-holder. (Legislation.gov.uk)
A director should therefore avoid informal arrangements under which records are left with a third party without telling the liquidator.
The safest approach is to preserve and provide all available records relevant to the company's affairs.
Directors should not assume that only the current financial year is required. The liquidator may need earlier records to understand historic transactions, director's loan accounts, asset disposals or the causes of the company's failure.
The Companies Act requires accounting records to be retained for at least three years from the date they are made in the case of a private company and six years in the case of a public company. Separate tax rules generally require company tax records to be retained for six years from the end of the relevant financial year, and sometimes longer. (Legislation.gov.uk)
These periods should not be treated as permission to destroy records once insolvency is anticipated. Even an older document may be relevant to an asset, dispute, tax enquiry or transaction that continues to affect the company.
Once liquidation is being considered, directors should preserve the available records and take advice before disposing of anything.
Incomplete records do not ordinarily prevent a company from entering liquidation, but the director must be open about what is missing.
The director should explain which periods are incomplete, why the records are unavailable and where replacement information may be obtained.
Bank statements may be downloaded again, accounting backups may be recovered, and copies of invoices may be obtained from customers or suppliers. Accountants, payroll providers and HMRC may also hold useful information.
Government guidance states that where records have been lost, stolen or destroyed, directors should do their best to recreate them and notify HMRC where appropriate. (GOV.UK)
The director should not create documents retrospectively and present them as original records. Any reconstruction should be clearly identified as such and based on reliable underlying information.
It is usually better to disclose the problem immediately than to provide an apparently complete set of records that contains unexplained gaps or inaccurate entries.
Directors remain legally responsible for ensuring that adequate company records are maintained, even where bookkeeping and accounts were outsourced.
The involvement of an accountant may help explain how the problem arose, but it does not automatically remove the directors' responsibilities.
The director should provide the engagement letter, correspondence with the accountant and copies of the information supplied to them. If the director repeatedly requested updated accounts or raised concerns about the quality of the work, that correspondence may be relevant.
Where the accountant has made an error, the director should explain the issue to the liquidator rather than attempting to correct historic records without leaving a clear audit trail.
No records should be destroyed merely because the business has ceased trading.
Stopping trading does not end the company's legal existence, and the records may still be required for tax, employment, creditor or insolvency purposes.
Once liquidation is proposed, directors should ensure that staff, accountants and IT providers are told to preserve company data. Automatic deletion policies should be suspended where possible, and electronic backups should be secured.
Under section 208 of the Insolvency Act 1986, a past or present company officer can commit an offence by failing to deliver books and papers belonging to the company that are in their custody or control and that they are legally required to deliver. The same legislation addresses conduct that prevents the production of records relating to the company's property or affairs. (Legislation.gov.uk)
Documents should not be altered, backdated or selectively removed before they are handed over.
The company's original records should be placed under the liquidator's control.
A director may have a legitimate reason to retain or request copies, particularly where the information is needed for a personal tax return, a personal guarantee dispute or separate legal proceedings.
This should be discussed with the liquidator. The director should not retain the only copy of a company record or remove original documents without permission.
Care should also be taken where the records contain employee, customer or other personal data. Copies should not be retained more widely than necessary or stored insecurely.
Resigning before the liquidation does not necessarily end a director's obligations.
Former directors may hold important information about the company's trading, assets and transactions. The statutory duty to cooperate can apply to people who are or have previously been company officers, and the liquidator may require them to provide information or attend a meeting. (Legislation.gov.uk)
A former director should therefore retain company records and respond properly to requests from the liquidator.
Where different directors were responsible for different parts of the company, each should explain the information within their knowledge. One director should not assume that another person will deal with the entire handover.
The liquidator will normally begin by making written requests and allowing the director a reasonable opportunity to provide the information.
If the director does not cooperate, the liquidator can apply to court. The court can require a person to attend a private examination, answer questions and produce documents relating to the company's affairs. (Legislation.gov.uk)
Failure to comply with a court order can lead to serious consequences. Government guidance states that these may include a fine, imprisonment for contempt of court or a warrant for arrest where the director fails to attend an examination. (GOV.UK)
Non-cooperation may also be included in the liquidator's director conduct report and can contribute to disqualification or other enforcement action. The Insolvency Service specifically identifies failure to provide records or cooperate with an office-holder as conduct that can have consequences for a director. (GOV.UK)
A director who is genuinely struggling to obtain information should communicate with the liquidator. Silence or repeated broken promises are likely to be treated differently from a director who explains the problem, provides what is available and assists with reconstruction.
The records should be organised so that the liquidator can understand what has been provided.
Paper files can be grouped by category and financial year. Electronic records should be copied into clearly named folders rather than supplied as a single unstructured collection of files.
The director should provide a schedule explaining which records are held electronically, which are in paper form, which are held by third parties and which are missing.
Accounting data should be backed up before access is transferred. Where possible, the director should also produce ledger exports, transaction reports and copies of key documents in commonly accessible formats.
Passwords and access information should be transferred securely rather than included in an unsecured email containing all the company's sensitive information.
The director should retain a list of everything handed over and the date on which it was supplied.
Preparing the records before appointment can make the liquidation considerably more straightforward.
Directors do not need to wait until the liquidator has formally been appointed before gathering bank statements, accounting backups, contracts and asset information.
However, company documents should not be altered or recreated merely to make them appear more complete. The purpose is to preserve and organise the records, not to rewrite the company's history.
The proposed liquidator can explain what will be needed and identify any obvious gaps before appointment. This can give the director time to obtain information from banks, accountants and software providers before access is lost.
A director must provide much more than the company's latest accounts when it enters liquidation.
The liquidator may require accounting records, bank statements, invoices, contracts, tax documents, payroll information, asset records, emails and access to electronic systems. Records held by accountants, employees or on a director's personal device may also need to be identified and provided.
The best approach is to preserve everything, disclose any gaps honestly and cooperate with requests from the liquidator. Missing records can often be reconstructed, but deleting documents or withholding access can create far more serious problems.
Molly Monks F.I.P.A of Parker Walsh is a licensed Insolvency Practitioner and provides clear, confidential advice to directors considering a Creditors' Voluntary Liquidation.
Parker Walsh can explain which records will be required, help directors prepare an orderly handover and identify any missing information before the liquidator is appointed.
Yes. You should identify what the accountant holds and authorise its release, but you must also provide records held by you, the company, employees or other service providers. An accountant may hold only part of the information required.
Usually, yes. The liquidator may require administrator access, a full backup and exports of the company's ledgers and transaction history. The subscription should not be cancelled until the records have been secured.
Relevant company emails should be preserved and supplied where requested. This includes emails concerning customers, suppliers, employees, assets, liabilities and company transactions.
The company-related communications may still need to be provided. You should work with the liquidator to separate business information from unrelated personal material.
Only where they are relevant. For example, statements may be requested where company money was paid into or out of a personal account or where a transaction involving the company needs to be verified.
Tell the liquidator immediately, explain what happened and assist in reconstructing the information from banks, accountants, HMRC, customers and suppliers. Do not attempt to conceal the loss or create false replacement documents.
No relevant company information should be deleted once liquidation is being considered. Preserve the mailboxes and allow the liquidator to determine what is required.
No. A former director may still be required to provide company information, hand over records and answer questions about the company's affairs.
Not necessarily. However, poor or incomplete records can make the liquidation more complicated and may lead to additional enquiries into how the company was managed.
You should hand control of the company's records to the liquidator. Copies may sometimes be retained or requested for a legitimate reason, but this should be agreed with the liquidator and handled securely.
I am Molly Monks, a licensed insolvency practitioner at Parker Walsh. I have over 20 years of experience helping directors with the financial struggles they may face. I understand that it can be overwhelming and stressful, so I offer practical straightforward advice, which is also free and confidential. I spend time with directors to get a good understanding of their business and their goals, therefore providing the best tailored advice possible.
Email: molly@parkerwalsh.co.uk
Phone: 0161 546 8143
WhatsApp: 07822 012199
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