Closing a limited company that owes a Bounce Back Loan can be a challenging process. The Bounce Back Loan Scheme was introduced by the UK government to provide financial support to small and medium-sized businesses during the COVID-19 pandemic.
If your company still owes a Bounce Back Loan and you are considering closing it, it is important to engage with your lender as soon as possible. You will need to provide a clear plan for how you intend to repay the outstanding loan balance. Your lender will work with you to assess your financial situation and determine the most appropriate course of action. If you are wondering how to close a limited company in the UK, this guide is for you.
It is worth noting that if you close your company without paying off the outstanding balance of the Bounce Back Loan, you may be held personally liable for the debt. This is because the loan is guaranteed by the government, and lenders are able to pursue the directors of a company for repayment of any outstanding debt.
To ensure that the process of closing your company is as smooth as possible, it is advisable to seek professional advice from a qualified accountant or business advisor. They will be able to guide you through the process and ensure that all necessary steps are taken to meet your legal and financial obligations.
How to close a limited company in the UK – A step-wise guide
1. Hold a meeting of directors
The first step in closing a limited company is to hold a meeting of directors. The purpose of this meeting is to pass a resolution to wind up the company.
2. Notify Companies House
Once the resolution has been passed, you need to notify Companies House that you intend to close the company. You can do this by filing the relevant form, which is called a DS01 form. You can file the form online or by post.
3. Inform all relevant parties
You will need to inform all relevant parties that the company is being closed. This includes creditors, employees, and shareholders.
4. Settle all outstanding debts
Before the company can be closed, you must settle all outstanding debts. This includes paying off any loans or credit agreements and settling any outstanding bills.
5. Distribute assets
If there are any assets left over after settling all outstanding debts, you will need to distribute them among the shareholders.
6. Apply for striking off
Once all the above steps have been completed, you can apply to have the company struck off the register at Companies House. You can do this by filing a DS01 form. You will need to wait at least three months from the date of filing before the company can be struck off.
7. Final steps
Once the company has been struck off, it will cease to exist. You should ensure that all final tax returns and accounts are filed and that all assets and liabilities have been properly dealt with.
Please note that the process of closing a limited company can be complex and time-consuming. It is advisable to seek professional advice from an accountant or business advisor to ensure that all legal and financial requirements are met.
SUMMING UP
Planning how to close a limited company in the UK that has a Bounce Back Loan requires careful planning and communication with the lender. It is crucial to engage with the lender as soon as possible and provide a clear plan for repayment of the outstanding loan balance. It is important to settle all outstanding debts before closing the company, including the Bounce Back Loan, to avoid personal liability for the debt. Seeking professional advice from a qualified accountant or business advisor is recommended to ensure that all legal and financial obligations are met. Failure to properly close the company may result in legal and financial consequences.