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Statutory demand for an unpaid invoice: the £750 and £5,000 thresholds, 21 days and when not to use one

A statutory demand gives a debtor 21 days to pay before you can wind up a company owing £750 or more, or bankrupt an individual owing £5,000 or more. How it works and the risks for disputed invoices.

By the Nemexio team · · 6 min read

What a statutory demand does

A statutory demand is not a court claim. It is a prescribed form you serve on the debtor, warning that insolvency proceedings may follow if the debt is not paid within 21 days [1].

For a company, failing to pay a demand for more than £750 within three weeks means it is deemed unable to pay its debts under section 123 of the Insolvency Act 1986 [2]. That is the ground for a winding-up petition.

The thresholds

  • Company: debt of £750 or more to apply to wind it up [1].
  • Individual, including a sole trader: £5,000 or more to apply to make them bankrupt [1].
  • Below these amounts, use a court claim instead.

How to serve it

Use the correct form from GOV.UK: there are separate forms for companies and individuals, and for debts with or without a court judgment [1]. Fill in the amount, how it is made up, and any interest.

Serve it at the company's registered office, or personally on an individual, and keep proof of service. The 21 days run from service [1].

When a statutory demand is the wrong tool

  • The customer disputes the work, the quantity or the price on substantial grounds.
  • The customer has a counterclaim, for example for defects or delays.
  • You mainly want to recover the money from a solvent business that is simply slow: a letter before action and a money claim are usually more proportionate.

Why it often works

Directors know that a winding-up petition is advertised and that banks can freeze the company's accounts once a petition is presented. For an undisputed debt, a statutory demand frequently produces payment within the 21 days.

Used against a disputed debt, though, it can backfire: the debtor can ask the court to restrain or dismiss the petition, and you may pay their costs.

Frequently asked questions

How long does the debtor have to pay a statutory demand?

21 days from service to pay or reach an agreement [1].

What is the minimum debt for a winding-up petition?

£750 for a company. For bankrupting an individual, the minimum is £5,000 [1].

Can I serve a statutory demand on a sole trader?

Yes, but bankruptcy is only possible for debts of £5,000 or more [1].

Do I need a court judgment first?

No. You can serve a statutory demand without a judgment, but the debt must be due and not genuinely disputed [1].

Put this into practice

FeatureAutomatic remindersA Tier 1 chasing a client does not use the same voice as a sole trader chasing a Tier 1. Nemexio writes the sequence for your position in the chain and for the document you are chasing, so you never send the wrong letter.SolutionAccounts receivable automationAutomate invoice follow-up from Xero, QuickBooks, Sage or FreeAgent: reminders in your name, statutory interest worked out, and chasing that stops when you are paid.IntegrationXero remindersYour open invoices are refreshed every week.
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Sources

  1. [1]GOV.UK — Make and serve a statutory demand, or challenge one
  2. [2]legislation.gov.uk — Insolvency Act 1986, section 123 (definition of inability to pay debts)
  3. [3]GOV.UK — Wind up a company that owes you money

Sources checked on 6 November 2026. This article is general information, not legal advice. For a specific contract or dispute, take independent advice.

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