Red flags · The register
Phoenix companies: same director, new company, old customers left behind
A phoenix company is a new limited company set up by the directors of one that has just failed, trading the same business under the same or a similar name, while the old company’s debts — including customers’ deposits — stay with the dead company. It is legal in most forms. It is also the single most useful thing to look for on Companies House before you pay a deposit, because the register shows every company a director has run and how each one ended.
Key facts
- A director of a company that went into insolvent liquidation may not, for 5 years, be involved with another company using the same or a similar name without court permission or a statutory exception; breach is a criminal offence and makes the director personally liable for the new company’s debts (Insolvency Act 1986, ss.216–217).
- The rule does not apply to companies that were struck off (dissolved without liquidation) — which is how most small trading companies actually end, and why a phoenix pattern is often perfectly lawful.
- Companies House lists every current and past appointment of a director, with the status of each company, free, under the officer’s name.
- Customers’ deposits are unsecured debts: when a company is liquidated, secured lenders, the liquidator’s costs and preferential creditors are paid first (Insolvency Act 1986, s.175 and Schedule B1).
- SafeToPay’s methodology turns a report red when a current director has two or more companies dissolved or liquidated in the last five years.
What a phoenix company is
A phoenix company is a successor company that carries on the business of a failed one: same director, same trade, often the same premises, vans and website, with a new company number. The old company keeps the liabilities; the new one keeps the customers. The name comes from the bird that rises from its own ashes, and the practice is older than limited liability itself.
Why it is mostly legal
Limited liability exists so that a failed business does not ruin the people who ran it. Starting again is allowed. What the law restricts is a narrow case: re-using the name of a company that went into insolvent liquidation, without telling creditors (s.216). Everything else — a company struck off for not filing accounts, a new company with a different name, a pre-pack sale of the business out of administration — is within the rules.
Why it matters to you anyway
Because your deposit is a debt of the company you paid, not of the person you spoke to. If that company is dissolved or liquidated between deposit and delivery, the person may be trading next door under a new number and owe you nothing. The pattern that ended the last company is the best available evidence of how this one will end.
What it looks like on the register
Open the company on Companies House, click People, then the director’s name. The officer page lists every appointment: current companies, resigned appointments and, for each, the company’s status. Three things to read.
How the previous companies ended
Dissolved after a voluntary strike-off (form DS01) usually means the company was closed by its owner, often because it was dormant or superseded. Dissolved after a compulsory strike-off means Companies House removed it for not filing. Liquidation — creditors’ voluntary liquidation or a winding-up order — means an insolvency practitioner was appointed because the company could not pay its debts. The last is the one that matters most.
The gap between the end of one and the start of the next
A new company incorporated a few weeks before or after the old one went into liquidation, in the same trade, is the classic timeline. A new company incorporated years later, in a different trade, is a career.
Similar names
“Smith Kitchens Ltd” → “Smith Kitchens (UK) Ltd” → “Smith Kitchen Design Ltd”. Companies House lets you search names; the pattern is visible in a minute.
| On the register | Harmless | Serious |
|---|---|---|
| Previous company’s status | Dissolved via voluntary strike-off, dormant accounts | Liquidation, administration, or compulsory strike-off with unpaid creditors |
| Timing | Years apart, different trade | Weeks apart, same trade |
| Name | Unrelated | Same or similar name |
| How many | One prior company | Two or more in five years |
| The website | “Established 2023” | “Established 2004” — the old company’s history claimed by the new one |
| Deposit terms | Normal for the trade, card accepted | Large, bank transfer only, urgent |
When it means nothing
One previous company, dissolved by strike-off with dormant or clean accounts, is the normal biography of a tradesperson: an early company that never traded, a partnership that split amicably, a company closed when the director took a job for a few years. The register records it; it is not a warning. Our methodology does not count a single dissolved company against a director at all.
When it means a lot
Two or more companies in the same trade ending in liquidation or compulsory strike-off within five years, followed by a new company with a similar name and a website claiming the old company’s history, is a pattern with a name. Each liquidation left creditors unpaid; if customers were among them, their deposits went with the company. The new company owes them nothing and can promise you the same thing. This is the point at which the deposit should not be paid by bank transfer under any circumstances, and probably not at all.
Two directors from real checks
The director previously ran one company in a related trade, dissolved four years ago; the current company has filed accounts on time and has reviews. The register also shows the domain was re-registered after lapsing. A single prior company is not a phoenix pattern, so the report stays amber “A few points to check” for other reasons (mobile number only) rather than red. The question to ask: what happened to the earlier company, and was it the same business?
Strike-off notice published in the Gazette, £16 of cash in the last accounts, no reviews, website claiming “10 years” for a company that is younger. Not yet a phoenix — but this is what the first half of one looks like: the current company is on its way off the register while the website is still taking enquiries. Any deposit paid now would be a debt of a company that is closing.
Enter a website address, e.g. example-builders.co.uk
What to do
- Find the company, then the director. Company number from the website footer or a free company check; then the officer page on Companies House.
- Count how the previous companies ended. Liquidations and compulsory strike-offs in the same trade within five years are what count; a single voluntary strike-off is not.
- Compare the website’s history with the company’s. “Established 2004” on a company formed in 2023 is the old company’s history — ask under which name.
- Ask the question directly. “I see your previous company went into liquidation in 2024 — what happened to its customers’ deposits?” A straight answer tells you a lot; a change of subject tells you more.
- Pay in a way that survives the company. At least £100 by credit card for Section 75; staged payments; no large bank transfer to a company with this pattern.
Frequently asked questions
Is a phoenix company illegal?
Not in itself. The law only restricts re-using the name of a company that went into insolvent liquidation, for five years, without court permission or a formal notice to creditors (Insolvency Act 1986, s.216). Starting a new company after a strike-off, or with a different name, is legal.
How do I check a director’s other companies?
On Companies House, open the company, click People, then the director’s name. The officer page lists every current and resigned appointment with each company’s status — active, dissolved, in liquidation — free, in about a minute.
Will I get my deposit back if the company goes into liquidation?
Rarely, if you paid by bank transfer: customers are unsecured creditors, paid after secured lenders, the liquidator’s costs and preferential creditors. If any part was paid by credit card and the price was £100–£30,000, claim from the card issuer under Section 75 instead.
Is the director personally liable for the old company’s debts?
Usually not; that is what limited liability means. The exceptions are narrow: breaching the s.216 name rule makes the director personally liable for the new company’s debts, and a liquidator can pursue wrongful or fraudulent trading. Neither helps a customer quickly.
What is the difference between dissolved and liquidated?
Dissolved means the company was removed from the register — voluntarily by its owner, or by Companies House for not filing. Liquidated means an insolvency practitioner was appointed to wind it up because it could not pay its debts. Liquidation is the stronger signal.
Sources
- Insolvency Act 1986, section 216 — restriction on re-use of company names — and section 217 — personal liability.
- Insolvency Act 1986, section 175 — preferential debts and order of payment.
- The Insolvency Service — phoenix companies and the role of the Insolvency Service.
- Companies House — officer appointment history.
- SafeToPay methodology v1.2 — the dissolved-companies rule and what turns a report red.
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Enter a website address, e.g. example-builders.co.uk