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Statutory demands for unpaid invoices

A statutory demand is a formal demand for payment that can lead to insolvency action if ignored. It's powerful, but only right in certain cases. This guide covers England and Wales.

What it is

A written demand telling the debtor to pay within 21 days. If a company doesn't pay or settle, you can ask the court to wind it up. For an individual, it can lead to a bankruptcy petition.

When you can use one

The debt must be undisputed and due now. For a limited company it must be at least £750. For an individual or sole trader, a bankruptcy petition needs a debt of at least £5,000.

When not to use one

Don't use it if the customer disputes the invoice. Courts can set the demand aside, and you may have to pay costs. Using it just to pressure a customer over a disputed debt can backfire.

The risks

Winding up or bankruptcy rarely means you get paid in full, and court fees and deposits are significant. Many businesses get better results from a letter before action and a normal money claim.

Alternatives

Firm reminders with statutory interest, a written payment plan, a letter before action, or a claim through GOV.UK Money Claims. Get legal advice before starting insolvency proceedings.

Common questions

What is a statutory demand?

A formal written demand requiring the debtor to pay within 21 days. If a company ignores it, you can apply to wind it up; for an individual it can lead to a bankruptcy petition.

What is the minimum debt for a statutory demand?

For a limited company the debt must be at least £750. For an individual or sole trader, a bankruptcy petition needs a debt of at least £5,000.

Can I use a statutory demand if the client disputes the invoice?

No. The debt must be undisputed. If it's disputed, the court can set the demand aside and you may have to pay costs.

Is a statutory demand better than a court claim?

Usually not for getting paid. Insolvency rarely recovers the full amount, so many businesses do better with a letter before action followed by a normal money claim.

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