The Insolvency Service handed out 573 director disqualifications lasting more than five years in 2016/17, the highest figure since 2010/11. In 2015/16, it handed out 532 bans.
Data from the regulator showed that, in total, there were 1,214 director disqualifications in 2016/17, compared with 1,210 one year earlier.
According to Moore Stephens, the increase in longer bans is part of the Insolvency Service’s crackdown on misconduct by directors.
However, the regulator said the average period of a director’s disqualification was 5.8 years, compared to 5.9 in 2015/16.
Director disqualifications can last up to 15 years in the most serious cases, the accountancy firm said.
These bans prevent an individual from being involved in the formation or management of a company. Directors are also personally liable for the losses of any business they are involved in while disqualified. They can also face criminal prosecution during that period.
The Insolvency Service has been taking tougher action on a host of issues, including against directors who choose to repay friends and family ahead of other creditors like HMRC; directors who transfer assets to a new company to avoid repaying creditors and directors use company money for personal benefit or when they keep a company trading while unable to pay its debts.
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.”
According to the Insolvency Service, the number of individual insolvencies increased during the last quarter to 24,531, due to an increase in individual voluntary arrangements.
The total number of individual insolvencies in Q1 2017 was 6.7% higher than in the previous quarter and 15.7% higher than the same quarter the previous year.
The government’s regulator said this was the highest number of individual insolvencies since Q2 2014.
In its Q1 2017 statistics released last week, the regulator also said the number of company insolvencies between January and March decreased compared with the “unusually high level” in the previous quarter, when a large number of connected personal service companies entered into liquidation.