A statutory demand threatens winding up or bankruptcy, and is a tool for a clearly due, undisputed debt.
A statutory demand is a formal written demand that, if it is not paid, secured or dealt with inside a fixed deadline, lets the creditor ask a court to presume the debtor cannot pay its debts and petition to wind up a company or make an individual bankrupt.
Nothing is filed with a court when the demand itself is served. The creditor serves a prescribed form directly on the debtor, and the deadline runs from that date. If the deadline passes unpaid, a petition can follow; if the debtor pays, secures the debt, or reaches a written arrangement with the creditor before the deadline, the matter ends there.
A winding-up petition is advertised once it is presented, in The Gazette, and banks commonly freeze a company's accounts on learning of one, whether or not the petition is later successful. That consequence is what makes a correctly used demand effective against a company that can pay.
A demand against a company requires a debt over £750, under section 123(1)(a) of the Insolvency Act 1986. Against an individual, including a sole trader, the debt must reach £5,000, under section 267(4) of the same Act.
| Debtor | Minimum debt |
|---|---|
| Company | over £750 |
| Individual or sole trader | £5,000 |
Separate unpaid invoices owed by the same debtor can be added together to clear the threshold, provided each one is due and undisputed. A single disputed invoice added to otherwise sound ones to reach the figure gives the debtor grounds to attack the whole demand.
The demand uses a prescribed form — Form 4.1 for a company, Form SD1 for an individual — and it states the amount claimed, how the debt arose, and the date by which the debtor must pay, secure or compound for it. A demand that understates or overstates the debt, or that claims interest that is not due, can be challenged on that basis alone.
Illustrative. The figure above £750 clears the company threshold on its own; see late payment interest and compensation for how the interest line is calculated.
A company is normally served by leaving the demand at, or posting it to, its registered office. An individual is normally served personally, handed to them directly; where that cannot be done, the creditor can apply to the court for permission to serve another way, such as by post to a last known address.
Keep evidence of how and when service happened — a certificate of service, or a statement from whoever delivered it — because the deadline below runs from that date, and a debtor who disputes the date of service can delay or defeat the whole process.
From the date of service, the debtor has 21 days to pay, secure or compound for the debt before a petition becomes available. An individual has a separate, shorter window — 18 days from service — to apply to the court to set the demand aside. A company has no equivalent rule-based procedure, and a company that disputes the debt resists it by opposing a petition if one is presented, or by applying to restrain its presentation.
Illustrative. Count calendar days from the date of service. The date the demand was drafted or posted does not start the clock.
A statutory demand is a tool for a debt that is clearly due. Serving one on a debtor with a genuine and substantial dispute, or a cross-claim equal to or larger than the debt, is treated by the courts as an abuse of process.
An individual who disputes the debt can apply within the deadline to set it aside, and a demand that should not have been served is likely to be set aside with the creditor paying the costs of the application. A company facing a petition on a disputed debt can apply to restrain its presentation or advertisement, and a creditor who presses on regardless risks paying the company's costs and facing a separate claim for the damage caused to a company that turns out to have been able to pay. See disputed invoices for how to assess whether a dispute is genuine before serving anything.
Once the 21-day deadline passes unpaid, the creditor can present a petition. The costs of doing so are substantial and are payable up front.
Illustrative, the scale in force from 13 July 2026. The deposit is largely refundable if no winding-up order is made. Legal fees for preparing and presenting the petition are additional, and agreed in writing beforehand.
A petition against a company is advertised once it is presented. A bank that sees the advertisement typically freezes the company's accounts before any hearing takes place, which can bring in payment from a company that can pay and had put the creditor behind other suppliers in its payment run.
A statutory demand fits a debt that is undisputed, owed by a debtor who appears able to pay, where the prospect of insolvency proceedings is likely to produce payment without a hearing. Check first whether the debtor can pay at all — see checking whether a customer can pay — because a demand against a debtor with no assets risks the cost of a petition that recovers nothing.
A County Court claim costs less to start, carries none of the abuse-of-process risk, and produces a judgment that can be enforced by several routes if a dispute turns out to exist. See taking a customer to court for the court fee scale, and send a letter before action first in any case where the right route is not yet decided.
No, not at that stage. The demand is served directly by the creditor on a prescribed form, and nothing is filed with a court when it is served. It sets up a statutory presumption: if the deadline passes unpaid, the creditor can ask a court to presume the debtor cannot pay its debts and petition to wind up a company or make an individual bankrupt. Proving when and how the demand was served matters, because the deadline and the whole process depend on that date. If the debtor pays, secures the debt or reaches a written arrangement with the creditor before the deadline, no petition follows and the matter is over.
Yes, treating them as an individual. A sole trader is pursued in their personal capacity, so the applicable threshold is the individual figure, £5,000, and the form used is the individual version, Form SD1. Confirm first that the name on your invoice is a genuine sole trader and not an unregistered partnership or a limited company you have identified incorrectly, because serving the wrong form on the wrong type of debtor gives grounds to have it set aside. Checking the public record for the correct legal identity takes a few minutes and avoids that outcome.
They run in parallel and apply to different things. 18 days is how long an individual has to apply to the court to set the demand aside. 21 days is the overall period before a petition can be presented against either a company or an individual if the debt remains unpaid. Both are counted from the date of service, not from the date the demand was drafted or posted, and a company has only the longer period because it has no formal set-aside procedure of its own.
Not the demand itself. The demand is served privately and is not a matter of public record, so it does not appear on the Companies House register or a credit file by itself. A winding-up petition presented after the deadline passes is different: it is advertised in The Gazette, and that advertisement is what banks and credit reference agencies pick up, often before any court hearing has taken place. The gap between a private demand and a public petition is why a demand can produce payment without the debtor's wider credit standing being affected.
Yes. A creditor who serves a demand and then discovers the debt is disputed, part-paid, or wrongly calculated can withdraw it in writing to the debtor before the deadline passes. Letting an unsound demand run its course only adds to the risk. Withdrawing early reduces the risk of a costs order if the debtor would otherwise have applied to set the demand aside. Correct the figures, and decide whether a fresh demand, a letter before action or a County Court claim is the better next step for what is owed.
Yes. Statutory interest under the Late Payment of Commercial Debts (Interest) Act 1998 continues to accrue on a qualifying debt for every day it remains unpaid, including the days the statutory demand is running. State the sum as at the date of the demand, and recalculate it before a petition is presented if time has passed, because the sum due on the petition should match what is owed on that later date. See late payment interest and compensation for the calculation.
A part payment that still leaves the remaining debt above the threshold does not stop the clock. The demand was correct when served, for the sum then due, and a partial payment made afterwards reduces what is owed without curing the default on the balance. Update the figures before any petition, acknowledge the payment in writing, and confirm what remains outstanding so the debtor has no basis to argue the sum on the petition is wrong. If the part payment brings the remaining balance under the £750 company threshold, or under £5,000 for an individual, a petition can no longer follow that demand, and a fresh demand or a County Court claim becomes the only route for what is left.
Yes, serving a demand is not a reserved legal activity, and we draft and serve them where a debt is clearly due, the debtor appears able to pay, and the figures have been checked. Presenting a winding-up or bankruptcy petition is different: that step, like issuing a court claim, is conducted by AD Solicitors (SRA no. 8011228). Tell us at the outset whether you are prepared to petition if the demand is ignored, because that decision affects whether a demand is the right first step at all.
We email you the letter before action checklist, the interest and compensation rules, and the cost of each recovery stage.
Tell us what you are owed and who owes it. We reply with the total once interest and compensation are added, the first step we recommend, and its fixed fee.
