Company Directors Disqualification Act 1986: disqualification following breach of HMRC securities legislation
Published 28 October 2026
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Who is likely to be affected
Company directors and other individuals involved in company management who are convicted of breaching HMRC securities legislation.
General description of the measure
This measure will extend the circumstances in which a court may consider disqualifying an individual from acting as a company director following conviction for breach of HMRC securities legislation.
A relevant conviction will provide the gateway for the court to consider whether disqualification is appropriate. Disqualification will not be automatic. The court will retain discretion to consider the facts and circumstances of each case before deciding whether to make a disqualification order and, if so, the appropriate period of disqualification.
Policy objective
The objective of the measure is to support the fairness and integrity of the tax system by strengthening the consequences of serious non-compliance with HMRC securities requirements.
It is intended to provide a targeted and proportionate means for courts to consider whether individuals convicted of securities offences should remain able to participate in company management. The measure will preserve judicial discretion and the existing safeguards in the director disqualification framework.
The policy addresses the specific gap whereby a person may be convicted of breaching a securities requirement but the sentencing court cannot currently consider director disqualification on the basis of that summary conviction.
Background to the measure
At Budget 2025, the government announced that it would amend the Company Directors Disqualification Act 1986 to extend the circumstances in which directors who break the law can be disqualified.
Ministerial agreement was subsequently obtained to undertake a voluntary consultation on the proposal. The consultation was conducted as part of the Insolvency Service’s wider consultation on corporate civil enforcement reforms.
Consultation responses showed support for a court-led approach, while emphasising the importance of proportionality, judicial discretion and appropriate safeguards.
Detailed proposal
Operative date
The measure will have effect in relation to the relevant behaviour and subsequent conviction occurring on or after commencement. Commencement will take effect upon Royal Assent of the Finance Bill 2026-27.
Current law
The Company Directors Disqualification Act 1986 provides a number of routes through which a court may disqualify an individual from participating in company management.
Section 2 provides a conviction-based power where a person is convicted of an indictable offence connected with the promotion, formation, management, liquidation or striking off of a company, or with the management of a company’s property.
Section 5 provides a conviction-based power in relation to specified contraventions of companies legislation.
HMRC may require security for future tax liabilities where it considers this necessary to protect the revenue. Failure to comply with a relevant security requirement can constitute a summary criminal offence.
A summary conviction for breach of HMRC securities legislation does not currently provide the sentencing court with an equivalent route to consider director disqualification.
Proposed revisions
Finance Bill 2026-27 will amend the Company Directors Disqualification Act 1986 to provide the sentencing court with a discretionary power to consider director disqualification following conviction for a qualifying offence under HMRC securities legislation.
A qualifying conviction will not result in automatic disqualification. The court will determine whether an order is appropriate after considering the evidence and circumstances of the case.
Summary of impacts
Exchequer impact (£million)
| 2026 to 2027 | 2027 to 2028 | 2028 to 2029 | 2029 to 2030 | 2030 to 2031 | 2031 to 2032 |
|---|---|---|---|---|---|
| Negligible | Negligible | Negligible | Negligible | Negligible | Negligible |
This measure is expected to have a negligible impact on the Exchequer.
Economic impact
This measure is not expected to have any significant macroeconomic impacts.
Impact on individuals, households and families
The measure may affect a small number of individuals who are directors, shadow directors or otherwise responsible for company management where they are convicted of failing to comply with HMRC securities legislation.
Any disqualification would remain subject to court discretion and existing judicial processes.
Equalities impacts
This measure may apply to individuals regardless of their protected characteristics. HMRC does not hold data that it can use to assess whether there are any disproportionate impacts to protected groups.
Administrative impact on business including civil society organisations
The measure is expected to affect a small number of businesses associated with serious non-compliance or phoenixism-related behaviour. It does not impose any new obligations on compliant businesses. Some consultation respondents raised concerns about possible impacts on business rescue and restructuring, however, the discretionary court-based model provides safeguards against disproportionate outcomes.
Operational impact (£million) (HMRC or other)
HM Revenue and Customs will not incur any extra costings implementing this change.
Other impacts
Other impacts have been considered and none have been identified.
Justice impact
Bodies overseeing the justice system across the UK may incur extra costs as a result of this change. These are currently being fully quantified.
Monitoring and evaluation
Consideration will be given to monitoring the impact of this measure using available management information, including information on relevant securities convictions, cases in which disqualification is considered and resulting court outcomes.
Further advice
If you have any questions about this change, contact Paul Winterton, Insolvency Strategy Delivery & Co-ordination, Volume Compliance & Shared Operations by email paul.winterton@hmrc.gov.uk.