A Statutory Demand is one of the sharpest tools available to a UK creditor — a formal legal document that puts a debtor on notice that if they don't pay within 21 days, you can apply to have them made bankrupt (individuals) or their company wound up (businesses). Because the consequences are so serious, it tends to get results fast.
What is a Statutory Demand?
A Statutory Demand is a formal, prescribed-form written demand for payment of a debt, served under the Insolvency Act 1986. It isn't a court order and doesn't itself start legal proceedings — it's a formal warning that legal proceedings (bankruptcy or winding up) will follow if the debt isn't paid or genuinely disputed within 21 days.
Who can use one, and for what amount?
Any creditor owed £750 or more by a limited company, or £5,000 or more by an individual, can serve a Statutory Demand, provided the debt is for a fixed, undisputed sum. It's not appropriate for debts that are genuinely in dispute — the debtor is entitled to challenge the demand, and courts will set it aside if there's a real dispute on the underlying debt.
How to serve one correctly
The demand must be on the correct prescribed form, correctly state the debt and how it arose, and be properly served — personally where possible, or by post/other method with evidence of delivery. Getting the form or service wrong is one of the most common reasons a demand gets successfully challenged, so it's worth having this checked by someone experienced in doing it, particularly for larger debts.
What happens after it's served — the 21-day clock
Once served, the debtor has 21 days to pay in full, agree a payment plan you're happy with, or apply to the court to set the demand aside (companies don't formally 'set aside' — this route is mainly for individuals; a company can apply to injunct a subsequent winding up petition instead). If none of that happens, the creditor can then move to the next stage: a bankruptcy petition (individual) or winding up petition (company).
In our experience, a significant proportion of debtors pay in full, or come to the table with a realistic proposal, within the 21-day window — the demand itself does most of the work.
Can the debtor challenge it?
Yes. If the debtor genuinely disputes the debt — disputes the amount, says the goods/services weren't delivered as agreed, or has a valid counterclaim — they can challenge it, and a court will generally side with them if the dispute looks real. This is exactly why it's important only to use a Statutory Demand on debts that are clear-cut and well evidenced; using it to pressure a genuinely disputed debt can backfire, including potential costs against the creditor.
Statutory Demand vs winding up petition
Think of the Statutory Demand as the warning shot, and the winding up petition as the follow-through. A winding up petition can only be based on an unpaid debt if a Statutory Demand (or equivalent) has already been served and ignored for 21 days — so this is a sequential process, not a choice between the two.
Get it right the first time
Because a defectively drafted or served Statutory Demand can be set aside — costing you time and, potentially, costs — it's worth having a specialist prepare and serve it correctly. UKDC handles this as part of our escalation process for commercial debts, so you don't have to navigate the paperwork yourself.
