Northern Ireland sets fees for compensation orders
If a director is disqualified and told to pay compensation, who handles the money and what does that cost? Northern Ireland now has a rulebook for that specific moment. On 11 February 2026, the Department for the Economy made the Disqualified Directors Compensation Orders (Fees) Order (Northern Ireland) 2026, with the Department of Finance concurring. It will take effect the day after the Northern Ireland Assembly approves it under the affirmative procedure.
Quick refresher so we all start from the same page. A compensation order (or a voluntary compensation undertaking) is a way to make a disqualified director contribute money to those who lost out because of their conduct. In Northern Ireland the power sits in Article 19A of the Company Directors Disqualification (Northern Ireland) Order 2002, first switched on by the Small Business, Enterprise and Employment Act 2015 and later widened in 2021 to cover dissolved companies. This new 2026 Order doesn’t change who can be made to pay; it clarifies the cost of getting that money out to creditors.
What service is the fee for? The Department for the Economy charges for the specific job of distributing the compensation it has received under a court order or an accepted undertaking. In plain terms, it’s an administration fee for turning one lump sum into individual payments to the people named in the order.
Who actually pays that fee? The Order says the fee is taken from the money received before any creditor is paid. That means the total pot the director pays is first reduced by the Department’s distribution costs, and only then shared out. So, the cost is ultimately borne by the creditors, not added on top for the director to pay separately.
How is the fee worked out? First, officials total the time they spend on the distribution. That time is multiplied by an hourly rate set out in the Schedule to the Order and linked to the Insolvency Service grading structure. Next, any necessary disbursements or expenses (for example, bank charges or postage) are added. That gives a single combined cost for the whole distribution exercise.
Here is the important twist for fairness discussions. The combined cost is then divided equally by the total number of creditors named in the compensation order or undertaking. It is not split by claim size. A small creditor and a large creditor will see the same deduction for the admin work. That is a clear policy choice in the text of the Order, so expect identical fee shares across all listed creditors.
VAT also gets a mention. Where VAT is chargeable on this service, it must be paid in addition to the calculated fee. In practice, that means each creditor’s equal share of the fee may have VAT added and deducted from the pot before they receive their payment. If you keep accounts, record what you actually receive; if you are VAT‑registered and unsure how this interacts with your books, ask a professional adviser.
Let’s make the maths concrete with a simple illustration. Imagine an order names four creditors. Officials spend three hours in total and the applicable hourly rate in the Schedule is £70. Disbursements come to £40. The combined cost is 3 × £70 (£210) plus £40, so £250. Divided equally, that is £62.50 per creditor. If VAT at 20% applies, each creditor’s deduction becomes £75. The remaining pot is then paid out after these identical per‑creditor deductions.
What this means if you are a creditor. Expect the Department’s statement to show the gross sum received, the total fee calculation, any VAT, and the equal per‑creditor deduction. Your final payment will be the amount directed to you in the compensation order, less your share of these costs. It’s reasonable to ask for a breakdown so you can check the time, rate and expenses added.
What this means if you are a disqualified director. The Order doesn’t change how much the court says you owe under a compensation order or what you promise under an undertaking. It clarifies that distribution costs are taken from the money you pay in before creditors receive it. In other words, the admin fee doesn’t sit on top of what you already owe; it comes off the pot before it’s shared.
Timing matters for planning. The Order was made on 11 February 2026 and will come into operation the day after the Northern Ireland Assembly affirms it. If you’re awaiting a payout or managing a case, build in the possibility that these fee rules apply once that vote happens.
For learners and classrooms, here’s how to read this kind of instrument. “Made” is the minister signing and sealing the rule; “affirmative procedure” means MLAs must vote for it before it starts; “Schedule” is where you find the rates and any technical detail. Names matter too: this one bears the seal of Dr Caoimhe Archibald, Minister for the Economy, with Department of Finance concurrence recorded the same day.
If you need the primary source, look for the Disqualified Directors Compensation Orders (Fees) Order (Northern Ireland) 2026 on legislation.gov.uk. The Schedule carries the hourly rates by Insolvency Service grade, and the Articles set out who pays, how the fee is split, and when VAT is added. That’s everything you need to teach, study, or apply the rule with confidence.