Home  >  News & Insight  >  Wrongful Trading – suspension of wrongful trading liability applies until 30 June 2021

Wrongful Trading – suspension of wrongful trading liability applies until 30 June 2021

Since the beginning of the pandemic, more and more clients are asking me about Wrongful Trading (“WT”). In particular, I am being asked about the risks this brings to Directors and how they, as Accountants and trusted advisors, can look out for signs of WT in order to protect their clients from any personal liability and/or action under the Company Directors Disqualification Act 1986 (CDDA).

WT entered the spotlight having initially being mentioned in the Corporate Insolvency and Governance Act 2020 (“The Act”). The Act introduced, as a temporary measure, the removal of the threat of personal liability arising from WT for Directors who continued to trade a company through the current crisis, with the uncertainty that the company may not be able to avoid insolvency in the future.

The relief means that Liquidators and Administrators will not be able to make WT claims against an insolvent company’s Director for any losses to the company or its creditors resulting from continued trading while the WT rules are suspended.

This was intended to remove the pressure on Directors to close otherwise viable businesses to avoid potential liability, enabling them to act without fear of the impact on themselves and their families. However, Directors still need to be mindful that their duties (set out in Sections 171 – 177 Companies Act 2006) still apply.

Suspension of the WT rules was initially for the period 1 March 2020 to 30 September 2020. However, new regulations, the Corporate Insolvency and Governance Act 2020 (Coronavirus) (Suspension of Liability for Wrongful Trading and Extension of the Relevant Period) Regulations 2020, have revived this relief from personal liability for WT. The suspension now also applies for the period 26 November 2020 to 30 June 2021.

To find out more about Wrongful Trading and the roles and responsibilities of those involved read this article What is Wrongful Trading and what are the roles and responsibilities of Directors and Liquidators?

If you would like to speak to Jimmy, you can contact him directly: – jimmy.fish@cowgills.co.uk   07717001087


The information was correct at time of publishing but may now be out of date.

Business Recovery
Posted by Jimmy Fish
20th April, 2021
Get in touch with Jimmy Fish