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This is general legal information, not legal advice.

Statutory Demand — How to Respond (UK)

The 18-day clock • the 21-day clock • grounds to set aside • defective demands • company demands • what to write back
Quick summary: a statutory demand is a formal written demand served by a creditor, not by a court. Ignoring it for three weeks is what lets the creditor petition for your bankruptcy — or to wind up your company.
This page explains what a statutory demand does under the Insolvency Act 1986 and the Insolvency (England and Wales) Rules 2016, the two separate deadlines that run from the date of service, the four grounds on which a demand can be set aside, and why a limited company has no set-aside application at all.
Specialty: statutory demand response for England & Wales — deadline triage, checking whether the demand itself is valid, and drafting a clear written reply that protects your position.
If a demand has just landed and you are not sure whether you have 18 days, 21 days or three weeks, whether the debt is genuinely disputed, or whether the demand is even properly drawn, this page tells you what to check first.
What this page helps you do
  • Date the clocks — work out the date of service and the two deadlines that run from it.
  • Audit the demand — check it against the fourteen content requirements the Rules impose on the creditor.
  • Choose a route — pay, secure, compound, apply to set aside, or (for a company) go for an injunction.
This is general legal information, not legal advice.
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Best for people saying:
  • “A statutory demand was pushed through my door.”
  • “I dispute most of this invoice.”
  • “They owe me money too — does that count?”
  • “It arrived at my company’s registered office.”
  • “Do I have 18 days or 21 days?”
  • “Is this the same as a County Court judgment?”
Start with the date on the demand and how it reached you. That is what sets everything else.

How this guide helps

Three steps — date it, audit it, answer it.
1) Fix the date of service
Every deadline runs from the date the demand was served, not from the date you opened it. Write that date down first.
Example: “It was handed to me at the door on the 3rd.”
2) Audit the demand itself
The Rules tell the creditor exactly what a demand must contain. A demand that leaves things out is a weaker demand.
You will know what is missing and what it is worth raising.
3) Reply in writing, in time
Set out your position on the record and decide whether a court application is also needed.
Silence is the one answer that positively helps the creditor.

What a statutory demand actually is — and what it is not

A creditor’s document, not a court’s.
Under the Insolvency (England and Wales) Rules 2016 the creditor serves the demand (r.10.2) and only files the certificate of service at court later, with the petition (r.10.3(1)). So at the moment it reaches you, no court has issued, checked or sealed it. It is not a County Court judgment and it is not an order to pay.
What it does is build a case. Insolvency Act 1986 s.268(1)(a) treats an individual as appearing unable to pay a debt payable immediately once a statutory demand in the prescribed form has been served, at least three weeks have elapsed, and the demand has been neither complied with nor set aside. Where the debt is not yet due, s.268(2) instead asks you to establish, to the creditor’s satisfaction, a reasonable prospect of paying when it falls due — which is why r.10.1(1)(a) makes the creditor head the demand as either a s.268(1) or a s.268(2) demand.
A demand alone does not make you bankrupt. To present a bankruptcy petition the creditor also needs the s.267(2) conditions: the debt (or the aggregate of debts) must equal or exceed the bankruptcy level of £5,000 at the time the petition is presented (s.267(4), s.267(2)(a)); it must be for a liquidated sum, payable immediately or at a certain future time, and unsecured (s.267(2)(b)); you must appear unable to pay (s.267(2)(c)); and there must be no outstanding application to set aside the demand (s.267(2)(d)).

The two clocks: 18 days and 21 days

These are different deadlines running from the same event. Confusing them is the most expensive mistake on this page.
18 days — to apply to set aside
r.10.4(2): an application to set the demand aside must be made within 18 days from the date of service. r.10.1(1)(m) requires the demand to say so on its face.
21 days — to deal with the demand
r.10.1(1)(n): failing to apply within 18 days, or otherwise to deal with the demand within 21 days after service, could lead to bankruptcy and to property or goods being taken away.
Three weeks — the creditor’s trigger
s.268(1)(a) requires at least three weeks to have elapsed since service before the deemed inability to pay arises. For companies, s.123(1)(a) requires three weeks’ neglect.
Filing stops the clock
r.10.4(5): time to comply with the demand ceases to run on the date the application is filed at court. A letter to the creditor does not do this.
The clock starts on service, not on awareness. Where the demand was not served personally and there is no acknowledgement, r.10.3(5) lets the creditor certify the steps taken and a date by which the demand will have come to your attention, and r.10.3(6) then treats it as deemed served on that date unless the court determines otherwise. Your own date of knowledge is something r.10.4(6)(a) makes you state in evidence — it is not what sets the deadline. The creditor is required by r.10.2 to do all that is reasonable to bring the demand to your attention and, if practicable, to serve it personally.
Served abroad? r.10.1(10) lengthens both periods: the 18 days becomes the number of days in the table accompanying the Practice Direction supplementing Section IV of CPR Part 6 plus 4 days, and the 21 days becomes that number plus 7 days. Check the table for the country concerned.

Audit the demand: what r.10.1 obliges the creditor to include

Fourteen content requirements, plus the standard contents in Part 1 of the Rules. Work through them line by line.
  • The right heading — naming s.268(1) or s.268(2) (r.10.1(1)(a)).
  • The amount and the consideration for it, or how the debt arises (r.10.1(1)(d)); if it rests on a judgment, the date of the judgment or order and the court (r.10.1(1)(e)).
  • Assignment history — if the debt was assigned, the original creditor and any intermediate assignees (r.10.1(1)(g)). Debt-purchaser demands often fail here.
  • Interest and running charges broken out — any interest of which notice was not previously given to you, and any other accruing charge, must be separately identified with the grounds for claiming it (r.10.1(7)), and must be limited to what had accrued at the date of the demand (r.10.1(8)).
  • Security valued and deducted — the full debt must be stated, but the demand must give the nature of the security and the value the creditor puts on it at the date of the demand, and claim the full debt less that value (r.10.1(9)).
  • A named human being to talk to — r.10.1(3)–(4) requires one or more named individuals with whom you may communicate about securing or compounding the debt, with a postal address, electronic address and telephone number where there is one.
  • Your rights spelled out — that bankruptcy proceedings may follow (r.10.1(1)(h)), the compliance date (i), the ways of complying (j), the right to apply to set aside (k), a statement referring to r.10.4(4) naming the court or hearing centre (l), the 18-day point (m) and the 21-day point (n).
  • Dated and authenticated — by the creditor or by someone authorised, and if by someone else, stating that they are authorised and their relationship to the creditor (r.10.1(5)–(6)).
Note what the Rules do not do: they no longer point you at a numbered form. Judge the document you were sent against the content requirements above, and record precisely what is absent.

Applying to set the demand aside (individuals)

Four grounds, one 18-day window, and a court that can refuse you without telling the creditor.
The grounds (r.10.5(5)). The court may set the demand aside where (a) you appear to have a counterclaim, set-off or cross demand equalling or exceeding the demanded debt; (b) the debt is disputed on grounds which appear to the court to be substantial; (c) the creditor holds security and either r.10.1(9) was not complied with or the security’s value equals or exceeds the full debt; or (d) the court is satisfied on other grounds that the demand ought to be set aside.
What you have to file (r.10.4(3) and (6)). The application must identify you, state that it is an application to set aside the statutory demand, state the date of the demand, and be dated and authenticated by you or someone authorised to act for you. It must be accompanied by a copy of the demand (where you have one) and supported by a witness statement giving the date you became aware of the demand, the grounds for setting it aside, and any evidence in support. Use the court or hearing centre the demand itself names under r.10.1(1)(l).
What can happen next. On receipt the court may dismiss the application without giving notice to the creditor if satisfied that no sufficient cause is shown (r.10.5(1)) — and time to comply with the demand then runs again from the date of that dismissal (r.10.5(2)). If it is not summarily dismissed, the court fixes a venue and gives at least five business days’ notice to you, the creditor and the contact named in the demand (r.10.5(3)); at the hearing it considers the evidence then available and may decide or adjourn with directions (r.10.5(4)). If the creditor merely undervalued its security but did comply with r.10.1(9), the court may order the demand to be amended rather than set aside, without prejudice to the creditor’s right to petition on it as amended (r.10.5(7)). If your application is dismissed, the court must make an order authorising the creditor to present a bankruptcy petition, either as soon as reasonably practicable or on or after a date it specifies (r.10.5(8)).
Do not treat paying it down as a cure. s.267(2)(a) tests the amount at the time the petition is presented, and s.267(1) allows a petition in respect of one or more debts and by more than one petitioning creditor — so debts can be aggregated. Getting one debt under £5,000 does not automatically end the risk.

If the demand is addressed to a limited company

Different section, much lower threshold, and no set-aside application exists.
Insolvency Act 1986 s.123(1)(a) deems a company unable to pay its debts where a creditor owed a sum exceeding £750 then due has served a written demand in the prescribed form by leaving it at the company’s registered office, and the company has for three weeks thereafter neglected to pay, secure or compound for it to the creditor’s reasonable satisfaction. (s.123(3) allows that money sum to be changed by order under s.416.)
Part 10 Chapter 1 of the 2016 Rules — including the 18-day set-aside application — operates on s.268 demands, that is, individuals. There is no equivalent set-aside route for a company demand. Where a company disputes the debt, the recognised route is an application to court for an injunction restraining presentation or advertisement of a winding-up petition: the Practice Direction — Insolvency Proceedings lists such applications, made under the court’s inherent jurisdiction, at para 3.3(2).
Waiting is materially worse for a company than for an individual, because a petition is gazetted before it is heard — para 9.8.2 of the same Practice Direction requires copies of gazetted notices to be lodged with the court as soon as possible after publication and in any event not later than five business days before the hearing. Move before that point, not after it.
A statutory demand is also only one of several ways a company can be shown to be unable to pay its debts. s.123(1)(b) covers unsatisfied execution on a judgment in England and Wales; s.123(1)(e) is the cash-flow test (unable to pay debts as they fall due); and s.123(2) is the balance-sheet test, assets less than liabilities taking into account contingent and prospective liabilities. Fixing the demand is not the same as fixing the company.

What to put in the response letter

The Rules prescribe no form for your reply — but what it says, and when it is dated, both matter.
  • The demand’s own details — its date, the sum claimed, and the date and manner of service as you understood it.
  • Your position on the debt — admitted, disputed in part, or disputed in full, with the reason stated in ordinary language and by reference to documents you can produce.
  • Any counterclaim, set-off or cross demand, with its amount — this maps directly onto r.10.5(5)(a).
  • Defects you have identified in the demand against the r.10.1 content requirements, listed specifically rather than generally.
  • Interest and charges that were not previously notified or that appear to run past the date of the demand, by reference to r.10.1(7)–(8).
  • Security the creditor holds and how it has been valued, by reference to r.10.1(9).
  • Any proposal to pay, secure or compound, addressed to the individual named in the demand under r.10.1(3).
  • A reservation that the letter is without prejudice to your right to apply to set the demand aside within the 18 days.
A letter is not a substitute for the court application. Only an application filed at court stops the compliance clock under r.10.4(5). If you have grounds under r.10.5(5), send the letter and file in time.
Nothing in Part 10 Chapter 1 prescribes a form, a witness, a notary, independent legal advice or registration for a debtor’s reply. It is ordinary correspondence: date it, sign it, keep proof of sending. The formalities begin only if you go to court.

Where this applies — and where it does not

England & Wales only. Do not carry these figures or deadlines across a border.
England & Wales. The procedural rules on this page are in the Insolvency (England and Wales) Rules 2016, and every rule heading in Part 10 Chapter 1 carries the “E+W” extent marker.
Scotland. Insolvency Act 1986 s.440(2)(b) provides that the second Group of Parts — the individual-insolvency Group containing ss.267 and 268 — does not extend to Scotland. The £5,000 bankruptcy level, the three-week s.268 demand and the 18-day set-aside application therefore have no application there. For companies, s.123(1)(c) supplies a separate Scottish limb based on an expired charge for payment, which is a diligence-based test rather than a statutory-demand test. Scotland has its own system; take Scottish advice rather than adapting anything here.
Northern Ireland. s.441(1) extends only a short list of sections to Northern Ireland, and s.441(2) provides that, subject to that, nothing in the Act extends to Northern Ireland or applies to companies registered or incorporated there. So ss.123, 267 and 268 do not apply, and neither the £750 nor the £5,000 figure is a Northern Ireland figure. s.123(1)(d) refers instead to a certificate of unenforceability granted in respect of a judgment against the company in Northern Ireland — a different mechanism.
Ireland, the United States, Australia and Canada. None of this applies. The Insolvency Act 1986 is a UK statute whose extent is set expressly by ss.440–441, and there is no basis for reading s.268 or these figures across to any other country.
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Long FAQ (statutory demands, England & Wales)

Tap to expand. Written in plain English, with the section or rule named so you can check it.
1) Is a statutory demand a court order?
No. The creditor serves it (r.10.2) and the certificate of service goes to court only with the petition (r.10.3(1)). No court has issued or sealed it when you receive it. That does not make it safe to ignore — s.268(1)(a) is satisfied by nothing more than non-compliance after three weeks.
2) Do I have 18 days or 21 days?
Both, for different things. An application to set the demand aside must be made within 18 days from the date of service (r.10.4(2)). Failing to apply within 18 days or otherwise to deal with the demand within 21 days after service is what r.10.1(1)(n) warns can lead to bankruptcy. Miss day 18 and the cheapest remedy is gone even though three weeks have not run.
3) It came in the post — when does my clock start?
From the date of service, not the date you read it. Where it was not served personally and you did not acknowledge it, r.10.3(5)–(6) lets the creditor certify a date by which the demand will have come to your attention, and it is deemed served on that date unless the court determines otherwise. Your own date of knowledge is something you state in evidence under r.10.4(6)(a).
4) On what grounds can a demand be set aside?
Four, under r.10.5(5): a counterclaim, set-off or cross demand equalling or exceeding the debt; a debt disputed on grounds that appear to the court to be substantial; security issues under r.10.1(9) or security worth at least the whole debt; or other grounds the court is satisfied justify setting it aside.
5) Does writing to the creditor stop the clock?
No. Only filing the application at court stops time running — r.10.4(5) says the time to comply ceases to run on the date the application is filed. A letter is useful evidence of your position, but it is not a substitute for the application.
6) Can I just pay it down below £5,000?
Do not rely on it. s.267(2)(a) tests the sum at the time the petition is presented, and s.267(1) permits a petition on one or more debts and by more than one petitioning creditor, so debts can be aggregated. A company faces a much lower bar anyway — s.123(1)(a) needs only a sum exceeding £750.
7) The demand is addressed to my limited company. Where is the set-aside form?
There isn’t one. Part 10 Chapter 1 of the 2016 Rules operates on s.268 demands, which concern individuals. A company that disputes the debt applies to court for an injunction restraining presentation or advertisement of a winding-up petition — Practice Direction — Insolvency Proceedings para 3.3(2). Take insolvency advice quickly.
8) The creditor holds security over my property. Does that matter?
Yes. r.10.1(9) requires the demand to state the nature of the security and the value the creditor puts on it at the date of the demand, and to claim the full debt less that value. r.10.5(5)(c) is a ground to set aside where that was not complied with or where the security is worth at least the whole debt. But if the creditor did comply and merely undervalued it, r.10.5(7) lets the court order the demand to be amended instead.
9) The demand includes interest and charges I have never seen before.
r.10.1(7) requires any interest charge not previously notified to you, and any other accruing charge, to be separately identified with the grounds for claiming it. r.10.1(8) limits the amount claimed for such charges to what had accrued at the date of the demand. A lump sum with no breakdown is worth challenging in writing.
10) What happens if my set-aside application is dismissed?
If it is summarily dismissed under r.10.5(1) — which the court may do without giving the creditor notice — time to comply runs again from the date of dismissal (r.10.5(2)). If it is dismissed after a hearing, r.10.5(8) requires the court to make an order authorising the creditor to present a bankruptcy petition, either as soon as reasonably practicable or on or after a specified date.
11) What has to go in the application?
Under r.10.4(3) it must identify you, say it is an application to set aside the statutory demand, state the date of the demand, and be dated and authenticated by you or someone authorised for you. r.10.4(6) requires a copy of the demand (where you have one) and a witness statement giving the date you became aware of it, the grounds, and the supporting evidence. Use the court named in the demand under r.10.1(1)(l).
12) I was served outside England and Wales. Do I get longer?
Yes. r.10.1(10) replaces the 18 days with the number of days in the table accompanying the Practice Direction supplementing Section IV of CPR Part 6 plus 4 days, and the 21 days with that number plus 7 days. The day count depends on the country, so check the table rather than assuming.
13) Does any of this apply in Scotland or Northern Ireland?
No. IA 1986 s.440(2)(b) excludes the individual-insolvency Group of Parts from Scotland, and s.441(2) means nothing in the Act extends to Northern Ireland or to companies registered there, apart from a short listed set of sections. Both have their own systems with different tests and different time limits. Take advice in the right jurisdiction.

 

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This is general legal information, not legal advice. If bankruptcy or winding up is in prospect, take advice from a solicitor or licensed insolvency practitioner.