HMRC are taking repayment seriously – so should you
The 100% government-funded scheme has had an impressive take-up with some £38 billion lent to over 1.3 million small businesses.
The first indications of disquiet came last week when the National Audit Office issued a report that anticipated a larger amount of fraudsters accessing the scheme through various methods thanks to the more relaxed application criteria.
Banks are only eligible for full reimbursement on defaulted loans if they have made an attempt to recover them and their fear is that there will be so many unpaid loans to pursue that an industry-wide system has to be agreed before the first payments come due in May 2021.
The Chancellor has already announced some tweaks to the program to try to minimise defaults such as extending repayment terms from six to ten years, allowing borrowers to switch to interest-only payments for a period or even take a six-month payment holiday
The Times understands that officials from the government have already contacted debt collection companies to assess if they would take on the loans to see repayment for which they’d be paid a fee.
Any unpaid debts would return to the banks which would then be free to claim the state guarantee attached to the loans.
This also has ramifications for directors looking to close their businesses.
An outstanding Bounce Back Loan is grounds for a debt collector, bank or other interested party to object to any striking-off motion on this basis, ruling out the dissolution route to close the company down. Liquidation is more likely to be the necessary route.
While there’s been no official announcements yet regarding enforcement of outstanding loans, conversations will definitely be taking place among parties to out their united course of action and soon.
If you’re worried about not being able to close your company then you can take appropriate and effective action in the meantime by getting in touch with us.
We can discuss all available options with you to get your company closed before any more rule changes are announced or enacted.