831 Company Directors Prosecuted for COVID Support Scheme Misconduct

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16 April 2024

The Insolvency Service has disqualified over 800 company directors for misusing loan schemes intended to support businesses during the COVID-19 pandemic.  

During the start of the pandemic in 2020, the COVID Bounce Back Loan Scheme was set up to allow SMEs to borrow a single loan of up to 25 per cent of their turnover at a low-interest rate. Loans of between £2,000 and £50,000 were given. 

The loan was intended to provide financial support to businesses losing revenue due to the COVID-19 outbreak. Individuals could use the loan to benefit their business and not for personal purposes.

Investigations by the Insolvency Service found that some company directors provided misleading information to receive money they were not entitled to.

Bounce Back Loan Funds Transferred to Personal Accounts

One director applied for three Bounce Back Loans worth a combined £120,000 in the summer of 2020 on behalf of three of their companies. The person claimed that the companies ran corporate hospitality golf events, developed residential properties and purchased foals for future sale. Insolvency Service investigations found that none of the three companies had income in their bank accounts before receiving the Bounce Back loans. At least £105,000 of the funds were transferred to the director’s personal account.

In another case, the director of a construction company received a £48,000 Bounce Back Loan in May 2020, which was topped up to the maximum £50,000 in November of that year. It was found that the director inflated the turnover of their company, receiving almost £46,000 more than they were entitled to. They also secured a separate £40,000 Bounce Back Loan from another bank in May 2020, which was against the scheme rules.

Nearly £80,000 of the £90,000 was transferred to the director’s personal bank account with no evidence that he used the funds for the economic benefit of the business. 

Dean Beale, Chief Executive at the Insolvency Service, said:  “It is important the Insolvency Service is taking such robust action to clamp down on directors who abused Covid support schemes and took from the public purse during the worst global pandemic for 100 years.”

Picture: a photograph of a person stacking piles of coins on a table. Image Credit: Unsplash

Article written by Ella Tansley | Published 16 April 2024

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