Customer in Administration: How to Recover Unpaid Invoices (UK 2026)

It becomes an unsecured debt against the estate. You register with the appointed administrator as an unsecured creditor and submit a proof of debt. Distributions to unsecured creditors are paid after secured creditors (banks with debentures), administration costs, and preferential creditors: employees for certain wage and holiday pay claims, then HMRC as a secondary preferential creditor for VAT, PAYE income tax, employee NICs and CIS deductions (for insolvencies from 1 December 2020, per GOV.UK).

Unsecured creditors often recover only a small fraction of the debt, and payment can take a year or more.

Within hours. (1) Stop all further credit and pause any work-in-progress. (2) Identify any goods supplied with retention of title and notify the administrator in writing straight away to claim them back. (3) Check the first creditors' notice for the proof of debt deadline. (4) If you have trade credit insurance, notify the insurer within the notification window in your policy. (5) Search Companies House for the administrator's name and contact details.

Yes. Under HMRC's bad debt relief, you can claim VAT back on the unpaid portion once it has been unpaid for 6 months after the later of the due date and the date of supply, and you must claim within 4 years and 6 months (VAT Notice 700/18). You don't have to wait for the administration to conclude. Claim via your VAT return (box 4). Keep evidence of the unpaid debt. If you later receive a partial distribution from the administrator, you must repay the corresponding VAT.

Only if you sold the specific invoice to a non-recourse provider before the administration filing date. Non-recourse spot factoring (Hydr, for credit-approved debtors) means the factor absorbs the loss. With recourse factoring (Bibby standard, most whole-book), the factor will demand the cash back from you. With invoice discounting, you remain on the hook for the full debt. Always confirm whether your facility is recourse or non-recourse.

Yes for businesses with concentrated debtor risk (one customer over 20% of turnover) or sectors with high failure rates (construction, retail, hospitality). The premium is quoted as a percentage of insured turnover. Major UK underwriters: Atradius, Allianz Trade (formerly Euler Hermes), Coface, Tokio Marine HCC, Nexus.

A policy pays an agreed percentage of the insured debt after a valid claim; check the indemnity level and claim timescales in the policy. Many invoice finance providers bundle credit insurance into their facility.

A Company Voluntary Arrangement (CVA) is a binding repayment plan agreed with creditors. You'll receive a CVA proposal document setting out what unsecured creditors will be paid (the dividend and timescale vary by case) and asked to vote. The CVA passes if 75% by value of voting creditors approve.

Once approved, you cannot pursue the original debt and must accept the CVA terms. If you suspect the CVA understates assets or favours connected creditors, raise it with the supervisor before the vote.