Closing a Limited Company with Bounce Back Loan

Closing a Limited Company with Bounce Back Loan

Closing a Limited Company with Bounce Back Loan

The Bounce Back Loan Scheme (BBLS) was introduced by the UK government to help small businesses cope with financial challenges, particularly during the COVID-19 pandemic. While these loans provided crucial support, situations may arise where a company that has taken out a bounce back loan needs to close down. This article provides a clear and straightforward guide on how to close a limited company under such circumstances, ensuring you meet all legal obligations and manage your finances responsibly.

What is bounce back loan

The Bounce Back Loan Scheme (BBLS) was set up to assist small and medium-sized enterprises (SMEs) in the UK. It offered easy application processes, quick approvals, and favorable terms, including a 12-month repayment holiday and a low fixed interest rate thereafter.

Scenario: Closing a Limited Company with a Bounce Back Loan

When a limited company decides to close down after receiving a bounce back loan, it’s essential to follow specific steps to ensure everything is handled correctly.

1. Assessing the financial situation

Before starting the closure process, assess your company’s finances thoroughly. Calculate the total amount you owe on the bounce back loan, including any interest that has accrued. This step helps you understand your financial position and plan your next steps accordingly.

2. Seeking expert debt advice

Closing a company that has taken a bounce back loan involves legal and financial complexities. It’s wise to consult with professionals—like accountants or legal advisors—who specialize in business closures. They can provide tailored guidance to ensure you navigate the process correctly and minimize any risks.

3. Repaying the bounce back loan

One of your main priorities when closing the company is repaying the bounce back loan. Use any available company funds to pay off the loan in full. If the company doesn’t have enough funds, discuss repayment options with the lender. Some lenders offer flexible plans that can accommodate your financial situation.

4. Informing Creditors and HMRC

Notify all creditors, including HM Revenue and Customs (HMRC), about your decision to close the company. Ensure all outstanding debts, including VAT and payroll taxes, are settled before proceeding with closure. This ensures compliance with legal requirements and minimizes potential penalties.

5. Dissolution of the company

To formally close your limited company, follow these steps:

  • Board Resolution: Hold a board meeting to propose and approve the company’s closure.
  • Filing Documents: Submit necessary forms to Companies House, including a DS01 form, which notifies them of your company’s intention to dissolve.
  • Debt Settlement: Pay all outstanding debts, including the bounce back loan. Distribute any remaining assets to shareholders according to their entitlements.

6. HMRC and final tax returns

Settle all final tax liabilities with HMRC as part of the dissolution process. Submit your final Corporation Tax returns and ensure all payroll taxes are paid up to the cessation date. Promptly notify HMRC of the company’s closure to avoid late submission penalties.

7. informing companies house

Notify Companies House about your company’s closure by submitting the required forms and paying any applicable fees. Once they process your application and complete necessary checks, your company will be officially struck off the register.

Final thoughts

Closing a limited company that has received a bounce back loan involves careful planning and adherence to legal obligations. By assessing your financial situation, seeking professional advice, and following the dissolution process diligently, you can manage the closure effectively. Prioritize repaying the bounce back loan and settling all debts to ensure compliance and minimize risks. Professional guidance is invaluable in navigating this process smoothly and ensuring all steps are completed correctly.

help with Bounce Back Loan Debt

If you are struggling with substantial bounce back loan debt and considering closing your company, Acme Credit Consultants is here to assist you. Contact us today to explore options and find a solution that best fits your situation. Don’t hesitate to reach out—we’re ready to help you navigate through this challenging time.

Call us at 0203 318 0990, +44 7779648018 ,

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Author

  • Rajnish Tyagi

    Rajnish Tyagi possesses certification as a qualified debt advisor and specializes in writing about debt management and related topics. His aim is to assist individuals in comprehending and effectively managing their debts and credit issues. Additionally, Rajnish Tyagi holds the position of managing principal at "Acme Credit Consultants Ltd," an FCA regulated firm that provides tailored debt solutions to both individuals and businesses facing financial challenges.

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