Tough Action Taken Against Directors For Covid Support Abuse

13th May 2023

The Insolvency Service has been at the forefront of Government action to clamp down on individuals and companies who abused the financial support given to businesses during the pandemic.

In 2022-2023, we used our civil and criminal enforcement powers to disqualify over 450 directors who abused the COVID-19 support scheme, as part of our ongoing work to track down pandemic fraudsters.

Figures published in April, by the Insolvency Service also show that directors guilty of COVID-19 related misconduct are being hit with longer disqualification periods and some with prison sentences. The average length of bans handed out to directors in the last year was seven years four months, up from five years ten months in 2021-22.

Of the total 932 director disqualifications obtained by the Insolvency Service in 2022-23 - 459 were cases involving COVID-19 financial support scheme abuse.

These have included:

The director of Digital Business Box Ltd. director who secured a £50,000 Bounce Back Loan and then applied to dissolve his company two weeks later. He was sentenced to 20 months imprisonment, suspended for 18 months, and 300 hours of unpaid work.

The director of Conwy Valley Lodge Ltd, which ran a hotel close to Snowdonia in Wales, who secured a £20,000 Bounce Back Loan, immediately before she applied to dissolve the company. She sentenced to 26 weeks' imprisonment suspended for 12 months.

The director of Safi Care Ltd which supplied staff for care homes who secured a £50,000 Bounce Back Loan and a £100,000 Covid Business Interruption loan. The company went into liquidation owing the full amount for both loans and the director was banned for 7 years.

The director of Fortress Restructuring Ltd who secured a £50,000 Bounce Back Loan despite the company not trading. The company was wound-up in the public interest on the petition of the Secretary of State and the director was banned for a period of 10 years

In addition to its civil enforcement action, the Insolvency Service also brought criminal prosecutions against six directors in 2022-23 for COVID-19 related misconduct.

Dave Magrath, Director of Investigation and Enforcement at the Insolvency Service, said, "These fraudsters are just the latest to find out that we will not hesitate to take firm action where we uncover such abuse, and this can ultimately result in a jail sentence.

The purpose of the Bounce Back Loan scheme was to support businesses during the pandemic, but it is clear a minority of company directors chose to maliciously abuse the scheme and defraud the taxpayer. Our team of experts continue to work round-the-clock to bring these criminals to justice."

Source
https://www.gov.uk/government/news/insolvency-service-newsletter-spring-2023