What Is a Statutory Demand?

A statutory demand is a formal demand for payment of a debt. Ignoring one can lead to bankruptcy proceedings against an individual or court proceedings to wind up, or close, a company.

Lowdown

In England and Wales, a debtor normally has 21 days after a statutory demand is served to pay the debt or agree how it will be paid. You do not need a lawyer to issue one.^[1]

Why It Matters

If the demand is not dealt with, a creditor may be able to start insolvency proceedings. For an individual, a bankruptcy petition can follow for a debt of at least £5,000. For a company, a winding-up petition can follow where the debt is more than £750.^[1]

GOV.UK also says you cannot usually use a statutory demand for a debt that is more than six years old.^[1]

The challenge process differs. An individual can apply to the court to have a demand set aside, meaning cancelled. The normal deadline is 18 days after service if they were in the UK. A company cannot use the same process but can apply to court to prevent winding-up proceedings.^[2][3]

Take particular care if the debt is genuinely disputed. A statutory demand is a formal step towards possible insolvency proceedings, not simply a stronger payment reminder.

Our Conclusion

Use a statutory demand only when you understand the debt, the relevant threshold and the consequences. If you receive one, act quickly because the deadlines are short.

Sources

[1] GOV.UK, Make and serve a statutory demand, or challenge one and How to serve a statutory demand

[2] GOV.UK, Challenge a statutory demand

[3] The Insolvency Service, Director information hub: Statutory demands