Company directors in Hampshire are being warned not to engage with unlicensed insolvency advisors.

The caution comes from Azets, a leading accountancy and advisory firm, which is highlighting the financial penalties, potential strike-offs, and even prison sentences that could result.

Rob Young, a partner at Azets, said: "It is very concerning that some directors are engaging the services of unlicensed advisors, often in the belief that they can abdicate themselves of financial and legal obligations."

According to him, these unlicensed advisors often use social media and direct marketing to target businesses in financial trouble.

They offer to buy the business share capital and relieve directors of their liabilities and debts.

They claim to absolve responsibility and protect directors from any action if a licensed insolvency practitioner is subsequently appointed.

Mr Young said: "The promises made are often completely false, but we estimate that several hundred businesses have engaged the services of these unlicensed advisors over the last five years, putting many directors at risk of further action months or even years in the future."

Azets, which has Hampshire offices in Southampton, Portsmouth, Winchester, Romsey, and Havant, advises businesses experiencing financial difficulty to engage the assistance of a licensed insolvency practitioner.

Mr Young said that legal obligations cannot be sold away and the best approach is to tackle issues promptly.

This warning comes in the wake of the Insolvency Service (IS) winding up Save Consultants Ltd for offering the services of an insolvency practitioner without the authority to do so.

The IS also appointed provisional liquidators to two related corporate rescue companies, Atherton Corporate (UK) Ltd and Atherton Corporate Rescue Limited, for offering services facilitating the sale of distressed companies as an alternative to using insolvency practitioners.

Mr Young said: "It is becoming more and more difficult for rogue insolvency advisors to operate, however, they still present a substantial risk to directors who decide to engage their services and follow their advice, which is often completely incorrect."

He further warned that selling the share capital of a business or changing the directors at Companies House does not absolve any director from being liable for a director’s loan account owed to the company or other proceedings for misfeasance, wrongful and/or fraudulent trading, or reusing a restricted company name.