Chasing payment from a limited company is a different challenge to chasing an individual. The company structure creates a legal barrier between you and the people running it — and that barrier is intentional. But it is far from insurmountable. UK law gives creditors a clear set of tools to pursue limited company debts, and knowing which to use at each stage is the difference between recovering what you are owed and writing it off.
This guide covers every step of the process, from the first formal demand to enforcement action, including what to do if the company goes into administration or is dissolved before you can recover.
Step 1: Send a Formal Letter Before Action
Before any legal or formal collection process can begin, you must send a formal letter before action (LBA). This is not optional — the courts expect it, and skipping it can prejudice your position if proceedings follow.
A proper LBA should:
- Clearly state the amount owed and the invoice references
- Give a deadline for payment (typically 7 to 14 days)
- Set out the action you will take if payment is not received
- Reference your entitlement to statutory interest under the Late Payment of Commercial Debts Act 1998
- Be sent to the company’s registered address as well as any trading address
A letter before action from a professional debt collection agency or solicitor carries significantly more weight than one sent directly by you. Many limited companies settle at this stage simply because the formal involvement of a specialist signals that you are serious.
Step 2: Instruct a Debt Collection Agency
If the letter before action does not produce payment, the next step is to instruct a specialist commercial debt collection agency. Agencies that focus on B2B debt recovery understand limited company structures and know how to apply effective, professional pressure without crossing legal lines.
What a commercial debt collection agency will do:
- Conduct company and director searches to understand the debtor’s financial position
- Make telephone contact with the decision-makers within the business
- Issue escalating formal demands on your behalf
- Negotiate payment plans where appropriate
- Refer to solicitors for court action if the company continues to ignore demands
Many agencies work on a no win no fee basis for straightforward commercial debts, meaning there is no upfront cost. This removes the financial barrier to acting quickly — and speed matters. Research consistently shows that debt recovery rates fall sharply the longer an invoice is left unpaid.
Step 3: Issue a County Court Claim
If the company refuses to pay after formal agency contact, the next step is a County Court claim. You can issue a claim online through Money Claim Online (MCOL) for debts up to £100,000. For larger debts, you file at the relevant County Court or the Business and Property Courts.
The process:
- File the claim and pay the court fee (between £35 and £455 depending on the amount)
- The company has 14 days to respond once served
- If they do not respond, you can apply for a default judgment immediately
- If they respond and contest the debt, the court will set a hearing date
- If judgment is granted in your favour, you receive a County Court Judgment (CCJ)
A CCJ is a formal court order requiring the company to pay. It is recorded on the company’s credit file and can affect its ability to borrow and trade. Many companies pay immediately once a CCJ is entered to protect their credit rating.
Step 4: Enforce the Judgment
If the company still does not pay after a CCJ is entered, you need to enforce it. There are several enforcement routes available against a limited company:
High Court Enforcement Officers (HCEOs)
For debts over £600, you can transfer the CCJ to the High Court and instruct HCEOs. This is typically the most effective enforcement route for commercial debts. HCEOs can visit the company’s premises and seize assets including vehicles, equipment, machinery, and stock. They have stronger powers than County Court bailiffs and a higher success rate.
Third-Party Debt Order
If the company holds funds in a business bank account, you can apply for a third-party debt order to freeze and redirect those funds to you. This requires a court application and evidence that funds exist in the account. It can be highly effective if the company is trading but simply refusing to pay.
Charging Order
If the company owns property, you can apply for a charging order over that property, converting the unsecured judgment debt into a secured debt. If the property is later sold or remortgaged, your debt is paid from the proceeds before the company receives anything.
Step 5: Consider a Statutory Demand or Winding-Up Petition
If the debt is undisputed and over £750, you have an additional option that often produces rapid results: a statutory demand.
A statutory demand is a formal legal notice giving the company 21 days to pay or secure the debt. If it fails to comply and cannot demonstrate a genuine dispute, you can apply to the court to wind the company up. A winding-up petition is a serious step — it effectively threatens the company’s existence — and its filing is a matter of public record. For companies that depend on their banking relationships and trade credit, the mere threat of a petition is often enough to produce immediate payment.
Use this route carefully. If the debt is disputed at all, the court will not support a winding-up petition, and an abusive statutory demand can expose you to a costs order.
What If the Company Goes Into Administration or Liquidation?
If the company enters administration or liquidation before you recover your debt, your position changes significantly. You become an unsecured creditor in the insolvency proceedings. You must submit a proof of debt to the administrator or liquidator. Unsecured creditors are typically paid last and often receive pennies in the pound — or nothing at all.
This is why acting quickly matters. The longer you wait, the greater the risk that the company’s financial position deteriorates to the point where there is nothing left to recover. If you have concerns about a debtor company’s financial health — late payment patterns, bounced payments, reports of financial difficulties — instruct a collection agency immediately rather than waiting.
What If the Company Has Been Dissolved?
If you discover that the limited company has already been dissolved and struck off the Companies House register, you may still be able to recover. Under section 1029 of the Companies Act 2006, you can apply to the court to restore the company to the register, provided it was dissolved within the last six years. Once restored, any assets that passed to the Crown on dissolution can potentially be recovered. This requires a court application and specialist legal advice, but it is a viable route in some circumstances.
Key Practical Points for Business Creditors
- Act early: Recovery rates drop sharply after 90 days. Do not let invoices age unnecessarily.
- Keep your documentation: Signed contracts, delivery notes, purchase orders, and email confirmations are all evidence. Maintain them from the start of every transaction.
- Use the correct registered address: All formal correspondence must be sent to the company’s registered office as shown at Companies House, not just its trading address.
- Check the company’s status: Before spending money on legal action, check Companies House to confirm the company is still active and has not been dissolved or placed in administration.
- Do not threaten action you are not prepared to take: If you threaten court proceedings, follow through. Empty threats reduce your credibility and give the debtor confidence to ignore you.
Take Action Now
Recovering a debt from a limited company is a structured process with clear legal routes at every stage. The key is to act promptly, use the right tools in the right order, and not allow the company structure to intimidate you into inaction.
Jack Russell Debt Collection specialises in commercial B2B debt recovery across the UK. We offer a free, no-obligation assessment of your outstanding debts with clear advice on the most effective recovery route. Our no win no fee option means there is no financial barrier to starting the process today.
Contact Jack Russell to discuss recovering your limited company debt — and find out how much we can recover on your behalf.
Disclaimer: This article is for general information purposes only and does not constitute legal or financial advice. For advice specific to your situation, consult a qualified debt recovery specialist or solicitor.
Frequently Asked Questions
Can I sue a limited company for an unpaid debt in the UK?
Yes. You can issue a County Court claim against a limited company for an unpaid debt. If the court finds in your favour it issues a County Court Judgment (CCJ) against the company. You can then enforce that judgment using a writ of control, a charging order, or a third-party debt order depending on the company’s assets and circumstances.
What is the fastest way to recover a debt from a limited company?
A formal letter before action from a professional debt collection agency or solicitor is often the fastest trigger for payment. Many companies settle within seven to fourteen days of receiving a formal demand that references County Court proceedings or a statutory demand. Acting quickly — ideally within 30 days of the invoice falling overdue — significantly improves recovery speed.
What happens if a limited company ignores a County Court Judgment?
If a limited company ignores a CCJ, you can apply to transfer enforcement to the High Court and instruct High Court Enforcement Officers (HCEOs). HCEOs have stronger powers than County Court bailiffs: they can seize company assets including vehicles, equipment, and stock. You can also apply for a charging order over company property or a third-party debt order to freeze funds held by the company’s bank.
Can I wind up a limited company to recover an unpaid debt?
If the debt is over £750 and undisputed, you can issue a statutory demand against the limited company. If the company fails to pay within 21 days, you can petition the court to wind it up. This is a serious step and should only be used as a last resort or when winding up is genuinely the appropriate outcome. It is most effective as leverage: many companies settle immediately when a winding-up petition is filed because it threatens their banking relationships and credit rating.
What can I do if the limited company has been dissolved?
If a limited company has been dissolved before you recovered your debt, you may be able to apply to Companies House to have it restored to the register under section 1029 of the Companies Act 2006. You have six years from the date of dissolution to make this application. Once restored, you can pursue the debt through normal legal channels. This process requires a court application and you should seek legal advice before proceeding.
Does the Late Payment of Commercial Debts Act apply to limited companies?
Yes. The Late Payment of Commercial Debts (Interest) Act 1998 applies to B2B contracts, including those with limited companies. If payment is overdue, you are entitled to claim statutory interest at 8% above the Bank of England base rate, plus a fixed compensation charge of £40, £70, or £100 depending on the invoice value. You can also claim reasonable debt recovery costs if the statutory compensation does not cover them.
Should I use a debt collection agency or a solicitor to recover a company debt?
For straightforward undisputed commercial debts, a professional debt collection agency is usually faster, cheaper, and more effective for the early stages of recovery. Agencies can operate on a no win no fee basis, removing upfront cost. If the debt is disputed, contested, or requires court proceedings, instructing a solicitor becomes necessary. Many specialist debt collection agencies work alongside solicitors and will refer your case seamlessly if litigation becomes required.
