The Insolvency Act, Section by Section | Part 3 | Section 208
The liquidator has taken over. What do you still owe them?
For directors of companies already in winding up, facing the liquidator’s questions, requests and deadlines.
Section 208 in plain English
The first two sections of Chapter X look backwards at what happened before the collapse. Section 208 changes direction. It governs how a director behaves once the company is in winding up, and it turns a failure to cooperate with the liquidator into a criminal offence.
The logic of the section is simple. The moment a company enters liquidation, its property, its records and the truth about its affairs belong to the process. The liquidator can only do the job if the people who ran the company hand all three over. Section 208 lists what that means in practice, and it reads as five duties.
Tell the liquidator everything
Fully and truly disclose all the company’s property, and how, when, to whom and for what value any of it was disposed of, apart from disposals in the ordinary course of business.
Deliver up the property
Hand over every part of the company’s property in your custody or control that the liquidator requires.
Deliver up the books
Hand over all books and papers in your custody or control that the liquidator requires, in whatever form they exist.
Report false debts
If you know or believe a false debt has been proved in the liquidation, tell the liquidator as soon as practicable.
Never block the records
After the winding up begins, preventing the production of any book or paper relating to the company’s property or affairs is an offence in itself.
The section adds one more limb with a reach into the past. Accounting for company property through fictitious losses or expenses is caught after the winding up begins, and it is also caught if it was done at a meeting of the company’s creditors in the twelve months before.
Where section 208 operates
The mirror image of sections 206 and 207: this section mostly lives after the winding up begins.
Who the section catches
The duties fall on past and present officers of the company. A director who resigned the week before the winding-up order carries the same disclosure and delivery obligations as one who stayed to the end, because the section is concerned with what a person knows and holds, rather than with the date on their resignation letter. Officers who kept records at home, on personal laptops or in personal cloud accounts remain fully within the delivery duties for everything in their custody or control.
What has to be proved, and by whom
The proof structure follows the pattern set by its neighbours, and once again the burden ends up somewhere directors do not expect.
Property or books withheld, disclosure that fell short, a false debt left unreported, or records blocked.
The section supplies the defences, and it is for the accused to make the relevant one out.
For most limbs, no intent to defraud. For obstruction of records, no intent to conceal the company’s affairs or defeat the law.
Prompt, complete cooperation with a documented trail of what was handed over, and when, defeats the charge.
Records drip-fed under pressure, property surfacing only when discovered, and gaps with no honest account leave the presumption standing.
There is a practical point buried in that structure. Cooperation is measurable. The liquidator’s file will show exactly what was requested, what arrived, and how long it took. By the time anyone assesses intent, the record of conduct has already been written, one email at a time.
What a conviction costs
Section 208 is a criminal offence triable in either court, carrying a custodial maximum and an unlimited fine on indictment. And because the conduct it punishes happens in front of the liquidator, prosecutions tend to arrive with the evidence already assembled.
Sustained obstruction of a liquidation, particularly where assets were being shielded, attracts custody in the serious cases.
Failure to cooperate with a liquidator is a recurring feature of disqualification cases, with or without a conviction.
The court can order delivery up and compel attendance for examination. Withholding rarely keeps anything withheld for long.
A director who obstructed early is disbelieved later, in every civil claim the liquidator brings on the same facts.
How the first requests are answered sets the tone for the entire liquidation. Femi has spent thirty years on both sides of these processes, inside HMRC and advising clients across tax and insolvency.
Book a Free 30 Minute CallThe defence, and the conduct that keeps you clear of the section
The defences are intent-based, so the question is always what the conduct shows about the state of mind behind it. Cooperation that is early, complete and documented makes the innocent explanation for any genuine gap easy to accept. The safe course through a liquidation looks like this.
The cooperation record
- Answer the liquidator’s questionnaire fully and on time, and say so plainly where memory is uncertain.
- Disclose every disposal outside the ordinary course of business, with dates, recipients and what was paid.
- Deliver up property and records promptly, including anything held at home, on personal devices or in cloud accounts.
- Keep your own log of what was handed over and when, so the record of cooperation is yours as well as theirs.
- Correct the picture the moment you remember something new, rather than waiting to be asked.
- Flag any creditor claim you believe to be false as soon as you form that belief.
- Take advice before interviews and examinations, and never guess under questioning.
The HMRC angle
In a compulsory liquidation on an HMRC petition, the disclosure a director gives is tested against a dataset the director rarely thinks about. The Official Receiver and any appointed liquidator can set the answers in the questionnaire against HMRC’s own records, and the gaps do the talking.
VAT and PAYE filings describe the trading that actually happened, so disclosure that understates it stands out immediately.
Phantom creditor claims lodged to dilute HMRC’s share of the estate are a known pattern, and one the section obliges directors to report.
Losses and expenses invented to explain away missing property collide with years of filed accounts and returns.
Femi’s practice sits directly on this ground. Eight years inside HMRC, fifteen years representing clients as a tax adviser at KPMG, Deloitte and Grant Thornton, and a further fifteen years as a solicitor acting for clients in the insolvency space. Directors usually meet a liquidation once. The people examining their answers do it every week, and the advice that matters is the advice that anticipates how those answers will be read.
A worked example
Take a composite scenario, drawn from common patterns rather than any client matter. Two building contractors go into compulsory liquidation on HMRC petitions in the same month. Each director receives the same questionnaire and the same request to deliver up records and remaining plant.
Plays for time
- Returns the questionnaire six weeks late, half completed.
- The accounts laptop is reported lost. The cloud bookkeeping login is never volunteered.
- A pre-liquidation sale of an excavator to a friend goes unmentioned.
- The liquidator finds the sale through the plant registry and the buyer’s bank transfer.
- Every gap now reads as concealment, and the burden of showing innocent intent is his.
- Section 208 exposure on disclosure, delivery and the withheld records, alongside the claims that follow.
Opens the books
- Returns the questionnaire inside the deadline, flagging two answers as best recollection.
- Hands over the laptop, the cloud login and a box of site paperwork, and keeps a receipt list.
- Discloses the pre-liquidation sale of a dumper truck, with the valuation and the bank credit attached.
- Writes to correct one answer a fortnight later when an old invoice jogs his memory.
- The liquidator’s report records full cooperation.
- No realistic section 208 exposure, and every later conversation starts from credibility.
Related sections and where to go next
Section 208 completes a trio. Section 206 catches concealment in the final twelve months before winding up, section 207 reaches transfers up to five years back, and section 208 governs conduct once the liquidator is in place. The next article in Part 1 turns to section 209 and the falsification of the company’s books, which overlaps with the records duties here and carries its own separate offence.
If a winding-up petition or a liquidator’s inquiry is already part of your situation, the practical guides in The Director’s Insolvency Survival Guide cover the urgent ground, including what happens when directors come under investigation.
And if the liquidator’s first letter has already arrived, the most valuable hour you can spend is the one before you answer it.
A confidential 30 minute call with Femi O. Ogunshakin, Solicitor, Tax Adviser and Former HMRC Inspector, before the questionnaire goes back.
Book a Free Call