Advice RE Company not trading with Covid Loan

[piperjock]

I had a limited company that was trading for years as I was a self employed contractor. Always paid tax on time etc.

When covid hit I had to leave my job as all contractors were out. I took out a covid loan and bounce back loan to try and change my business into a more self employed one instead of myself just going to various sites as a one man band contractor.

This didn't work out and after covid I went back contracting, but then IR35 reform meant all contracting roles have now ceased.

As a result I have been employed in a low paid PAYE job for the last 2 years. In this time I have been transferring money into my company bank account each month to cover these loans. This has got me in trouble as i've run up personal debts trying to service these loans.

I can no longer keep doing this, I told the bank last week that I am no longer trading and can't put any more money in. They were quite nice about it and said it will go to recovery. I have now received letters saying full amounts are due and it's going to recovery for collection.

I really don't know what will happen next. My company was just myself so there is no assets, the address is however my home one.

 

[Tables Force]

As a result I have been employed in a low paid PAYE job for the last 2 years. In this time I have been transferring money into my company bank account each month to cover these loans. This has got me in trouble as i've run up personal debts trying to service these loans.

I can no longer keep doing this, I told the bank last week that I am no longer trading and can't put any more money in. They were quite nice about it and said it will go to recovery. I have now received letters saying full amounts are due and it's going to recovery for collection.

I really don't know what will happen next. My company was just myself so there is no assets, the address is however my home one.

Remember, YOU and LTD company are two seperate entities. Any letters about the loan will (should) be addressed to the company, not to you.

If you were eligible for the loan and you used it for normal business purposes, there was no need for you to pay this from your personal funds (as lenders were not allowed to ask for personal guarantees) and definitely not if this is causing you to incur personal debt.

 

[Lisa Thomas]

Happy to speak to you about the dissolution process for your insolvent company, assuming it cannot afford to liquidate.

Also, have a read of this:

Is the Spongebob Plan pants, or a fair and square way to close a company if you’re skint?

Is the Spongebob Plan pants, or a fair and square way to close a company if you’re skint?

www.ukbusinessforums.co.uk

and maybe watch this:

- YouTube

Enjoy the videos and music that you love, upload original content and share it all with friends, family and the world on YouTube.

youtu.be

 

[piperjock]

Thanks for the reply. I really did want to pay thes eloans off and they were taken in good faith. I was fully expecting to be going back to contracting but it was the governments IR35 reform that has made it impossible so what can I do.

The only debts are the 2 covid loans. an overdraft with the same bank which I personally guaranteed. and a cradit card with a small balance from a different bank. The thing I don't quite understand is my company tax return. While I am fully up to date with HMRC this is based on last years return, there is now another return due which as it is for 2023 - 2024 will show a small amount of income as it was trailing off. Should I file this and have this tax to find? Should I still be trying to pay my accountants monthly fee to do this work?

 

[Lisa Thomas]

It depends on what you decide to do with the company going forward.

 

[piperjock]

I want it to close down and give the banks the chance to claim back the covid loans from the government guarantee scheme. I have no need for it as i am now employed in a full time PAYE role. I will probably need to pay the overdraft as I guaranteed it but I will have to find that and it's a lot less than the loans.

 

[DontAsk]

You should have cleared the overdraft and released the guarantee, rather than paying off the companies debts. Did you get advice from your accountant?

 

[piperjock]

My accountant is not very forthcoming with advice. They are just an online company that does returns really. I don't mind if I have to pay that then I will come to some agreement for a payment plan but I have already run up personal debts trying to pay the business loans. I know now I went about it the wrong way.

I just don't know how to deal with the HMRC situation as although i don't owe anything now I might when I file my return and if I apply to wind up the company do I still need to do the return for 2023-2024 and if so i'll need to keep paying my accountant.

 

[Lisa Thomas]

Do you intend to dissolve it, or liquidate it? Are there any assets, including non physical ones like an overdrawn directors loan?

 

[piperjock]

I didn't want to pay a liquidator I was hoping the bank would wind it up to claim the covid loans back or I could do it via the DS01 form. There isn't an overdrawn directors loan as i've been putting money in for months to cover the loan payment. I just want to close it down as I haven't been trading for nearly a year. No assets as it was just myself as a contractor.

 

[ChrisCallaghan]

Hi @piperjock ,

The situation you find yourself is one that many visitors to this forum are facing. @Lisa Thomas has already kindly offered to advise you on the options, mainly attempting a strike-off/dissolution VS liquidation, however please find my contact details below if for any reason you would like additional advice.

I didn't want to pay a liquidator I was hoping the bank would wind it up to claim the covid loans back or I could do it via the DS01 form. There isn't an overdrawn directors loan as i've been putting money in for months to cover the loan payment. I just want to close it down as I haven't been trading for nearly a year. No assets as it was just myself as a contractor.

I'm sure @Lisa Thomas will explain in more detail if/when you contact her, but for now the banks are not taking action to wind up companies with outstanding BBLs, unless they suspect BBL misuse, misapplication and/or fraud.

 

[UK Contractor Accountant]

When covid hit I had to leave my job as all contractors were out. I took out a covid loan and bounce back loan to try and change my business into a more self employed one instead of myself just going to various sites as a one man band contractor.

what were loans spent on????

 

[piperjock]

Trying to turn my business from sole contractor to independent company. I rented an office, had a website built, extra software lots of marketing and advertising etc.