Bounce back loan amnesty deadline: December 31st  

In September, a voluntary repayment scheme was implemented to provide Covid scheme recipients with a “no questions asked” window to repay outstanding money that they were not entitled to or did not need.

A deadline of 31 December was given for those businesses and individuals to pay back money that was obtained incorrectly (or mistakenly in some cases), where for example:

• A false turnover was declared, resulting in a higher Bounce Back Loan that the company would not otherwise have been entitled to; or
• Where a Bounce Back Loan has been used for purposes other than for the survival of the company.

With just weeks until the December 31st deadline, over 700 directors have already been disqualified for Bounce Back Loan misuse — and the Insolvency Service warns this is just the beginning. 71% of all director disqualifications in 2024-25 related to COVID loan abuse.

The Multi-Billion Pound Problem

The Insolvency Service has made clear that abuse of Covid support schemes, and Bounce Back Loans in particular, is an enduring enforcement priority rather than a closed chapter, given the cost to the state, with the average disqualification period being 8.3 years and compensation orders being more aggressively pursued to recoup losses.

Why This ‘Amnesty’ Isn’t Really an Amnesty

The deadline of 31^st December offers directors the opportunity to pay back the loans without the need for the Insolvency Service to chase them down. However, it is important to note this is by no means a true amnesty. The Insolvency Service has explicitly stated that:​

• Repayment does not guarantee immunity from civil, criminal, or disqualification proceedings
• Voluntary repayment may be treated as a mitigating factor, potentially reducing the length of a disqualification period rather than avoiding it entirely
• There are no guarantees of protection from investigation

Tom Hayhoe, the COVID Counter-Fraud Commissioner, delivered an unequivocal message: “Pay now and clear your conscience or face the consequences.”

The New Year will see a stricter approach toward directors who ignored earlier opportunities to regularise matters, potentially resulting in longer bans or higher compensation orders.

The Personal Cost: When Directors Face Personal Liability

A critical point for directors to understand is that even though Bounce Back Loans did not require personal guarantees, directors could face personal liability if they misused the funds or breached scheme rules. Additionally, all directors who approved a Bounce Back Loan can be held responsible for any misuse, not merely the one who executed the application.

Criminal Sanctions

Recent cases demonstrate that courts are increasingly willing to impose criminal sanctions. In one recent case, a joiner applied for a second Bounce Back Loan of £30,000 despite already having received a valid £20,000 loan. He misused £11,500 for personal expenses.

Despite repayment in full, he went on to receive a 15-month suspended sentence, unpaid work and a compensation order.

Civil Sanctions

For liquidated companies, appointed insolvency practitioners will interrogate all directors’ conduct.

Liquidators may pursue directors for losses wrongly incurred by the company, including the misuse of Bounce Back Loans.

The Insolvency Service can likewise invoke the Company Directors Disqualification Act 1986 in seeking a disqualification order where a person’s conduct as a director of an insolvent company makes them unfit to be a director going forward.

This can then lead to the making of compensation orders, being an order to make a repayment.

Practical implications for directors

For directors who are uneasy about how a Bounce Back Loan was obtained or used:

• Re‑examine the original application;
• Consider how funds were spent; and
• Identify any transactions that may be difficult to justify if scrutinised.​

Early engagement with our team can help frame any interaction with lenders, office‑holders or investigators, including advice on the voluntary repayment opportunities and how to present mitigation. For those who acted honestly but carelessly, prompt remedial action and clear evidence of improved controls can strengthen your position and support a more proportionate response from those reviewing the matter. Get in touch with our legal experts today.