Can I Strike off (Dissolve) a Limited Company with a Bounce Back Loan?
No, you cannot dissolve or strike off a company to avoid repaying a Bounce-Back Loan (BBL).
The loan represents a legal obligation that must be repaid in full before the company can be struck off the register at Companies House.
Attempting to dissolve a company without first repaying a BBL would be considered an abuse of the dissolution process and a breach of your duties as a director. This could potentially lead to:
Personal liability for the outstanding loan amount being passed to the directors.
Disqualification as a director for up to 15 years.
Civil and/or criminal proceedings for fraud or misconduct.
If you are unable to repay your bounce back loan, you must enter into a formal insolvency process like a Creditors’ Voluntary Liquidation (CVL). It is important to explore all Bounce Back Loan write-off options through proper insolvency procedures rather than attempting to dissolve the company without addressing the debt.
If you are considering striking off your company, you should seek professional advice from licensed insolvency practitioners such as ourselves. We can help you understand your options via free, expert advice.
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What is Likely to Happen if You Dissolve a Limited Company with a Bounce Back Loan?
If you try to dissolve a limited company with a bounce-back loan, you will receive a letter from Companies House known as the “Objection to Company Strike Off Notice.” This letter indicates that Companies House has identified the company’s debts and that your requested action is being questioned.
Who objects to the dissolution?
HMRC often objects, as they monitor the Companies House register
The finance provider who issued the loan is also likely to object
Despite HMRC’s guarantee of these loans, the responsibility for chasing defaults remains with the banks, who have been asked to use their normal debt enforcement protocols.
Of course, any strike-off action by directors must comply with the statutory requirements to inform creditors. As stated on the government site: “If your company has creditors, members, employees, etc., you should inform all the necessary people before applying.”
What are the Criteria for Striking off a Company?
The criteria for striking off a company in the UK are as follows:
The company must have no debts or liabilities.
The company must not be trading or carrying on any business.
The company must not be involved in any legal proceedings.
The company must have given notice to all of its creditors of its intention to be struck off.
The company must have published a notice of its intention to be struck off in the Gazette.
If the company meets all of these criteria, it can apply to Companies House to be struck off.
If I’ve Struck Off the Company with an Existing Bounce Back Loan, Could HMRC Reinstate it?
Yes, HMRC has the power to reinstate a company that’s been incorrectly struck off:
This can happen at any time in the future
There’s no time limit on when HMRC can take this action
For directors thinking that perhaps a strike-off might provide a quick solution for company closure, there will be continuous uncertainty ahead unless you address the debts before attempting to dissolve.
What does the law say?
The Companies Act, Section 1003 (6), states:
“The liability (if any) of every director, managing officer and member of the company continues and may be enforced as if the company had not been dissolved.”
What’s the Correct Way to Close a Limited Company with a Bounce Back Loan?
If you wish to close a company and you took a Bounce Back Loan, it is still possible to eradicate the debt and close the limited company.
With a voluntary liquidation, a licensed insolvency practitioner deals with the company creditors, sells any assets to pay debts and finally strikes the company off as part of the process.
If you’re concerned that you may not have funds, it might be possible to apply for director’s redundancy payments, which are offered by HMRC as long as you’ve been trading for 2 years.
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