The Government has announced that the Insolvency Service will be granted greater powers to investigate directors who have dissolved their companies in order to fraudulently avoid paying back Government backed loans, such as the Bounce Back Loans (BBLs).
Company dissolution, or striking off, closes down a limited company by removing its name from the official register at Companies House. Dissolution, when used correctly, is a way of closing a company where no debt is present or where any outstanding debt or other liabilities can be settled in full within 12 months. Until recently directors were able to take advantage of a loophole to dissolve companies which were still able to pay their debts as a means of avoiding repaying BBLs.
The new powers will enable the Insolvency Service to investigate and seek disqualification of the directors involved. Disqualification can last for up to 15 years. During this time you can not be a director of any company registered in the UK or an overseas company that has connections with the UK; or be involved in forming, marketing or running a company. Anybody breaking these rules of disqualification can face a hefty fine and imprisonment of up to two years.