Bounce-back loan

[jimbof]

have got some back anyway on the vat paid on luxury goods for the Directors as mentioned by @Red Wood

Of course, and there's always the argument that the banks didn't lose anything if the loan wouldn't have happened had it not been for the excellent rate. So they may be better off than they would have been had they got 8.9% interest of zero pounds

 

[Aniela]

I don't think Insolvency laws will be changed - the IP's will pursue preference cases in accordance with their duties and the law.

As already stated if the BBL's are repaid who cares what they were used for.

It's a scheme to help businesses. Not a scheme for people to abuse. It's more of the morality of it and being a decent human being.

If someone stole your car overnight but had in back in your drive by 6am with cash to cover the fuel they used, I'm sure you wouldn't be saying "well, I was no worse off so who cares."

It's just the point of it. It's wrong.

 

[UK Contractor Accountant]

Insolvency practitioners have been instructed to report fraudulent coronavirus loan applications to the government, ahead of an expected surge in company failures this year.
The Insolvency Service has written to firms advising that “if it appears that a person has applied fraudulently” for the government-backed business interruption loan scheme and bounce back loans, “it is the duty of the insolvency practitioner to consider their reporting obligations”.

Insolvency firms are expecting a “tsunami of winding-up petitions” being presented by creditors this year once a moratorium on restricting the use of such action ends in March.

 

[jimbof]

Time to become an Insolvency Practitioner!

 

[Talay]

Said directors will be protected by the sheer volume of these cases. Safety in numbers.

Of course they will. I know accountants who are working on restructuring packages for some clients already. They will then deal with an IP who pre agrees to XYZ and if it isn't agreed, then another IP will be sought.

It won't cross the line of illegality but if people have multiple businesses and at least one is on life support, it might as well be the one with the BBL liability.

 

[Talay]

...
It's heartening to see some arrests of scallywags who've been doing this on an industrial scale:
https://www.lbc.co.uk/news/four-arrested-alleged-covid-bounce-back-loan-fraud/

The rules were so poorly thought out.

All you had to do was buy an off the shelf company which was opened in the right time period then open a bank account, predict £250k+ income and apply for and get a £50k BBL.

I could have bought 100+ companies and done exactly that. £5m plus.

 

[jimbof]

The rules were so poorly thought out.

All you had to do was buy an off the shelf company which was opened in the right time period then open a bank account, predict £250k+ income and apply for and get a £50k BBL.

I could have bought 100+ companies and done exactly that. £5m plus.

The rules were pretty clear. That is a fail of literally the 1st rule that was in place. There are a ton of other frauds you could choose to involve yourself in, too, if you don't mind the prospect of ending up in jail.

From: https://www.british-business-bank.c...unce-back-loans/faqs-for-small-businesses/#f2

The business is engaged in trading or commercial activity in the UK at the date of the application, was carrying on business on 1 March 2020 and has been adversely affected by coronavirus (COVID-19).

 

[Mr D]

The rules were pretty clear. That is a fail of literally the 1st rule that was in place. There are a ton of other frauds you could choose to involve yourself in, too, if you don't mind the prospect of ending up in jail.

From: https://www.british-business-bank.c...unce-back-loans/faqs-for-small-businesses/#f2

That is an extremely broad sentence. Covering pretty much every business around.
And of course impossible to check on adversely affected during the application process.

 

[jimbof]

That is an extremely broad sentence. Covering pretty much every business around.
And of course impossible to check on adversely affected during the application process.

Luckily I was replying to a specific point made by someone else and not talking in generalities. It doesn't cover @Talay's example of using "aged" companies - they are specifically provided with certificates that show they haven't traded(!) for the purpose of the person purchasing them being sure there aren't outstanding liabilities.

And whether or not it can be checked isn't the point - the issue is whether it is within the rules or not (ie leaving the avenue open for prosecution in the future). The rules themselves were sufficient. Arguably there may not have been enough checks on the rules, but the reality is if there had been such onerous checks in place you'd probably find even less banks would have offered the loans, and far fewer genuine businesses in need would have been able to access the funding.

There have been a ton of financial scams you could choose to partake in in years gone by - eg the VAT missing trader scam - exploiting loopholes in the availability of cash in the system. But they're almost always illegal / fraud at the point of perpetration and understood to be such by the people doing so. No-one doing what @Talay proposes could have even the slightest shred of thought that what they were doing was legit.

 

[Talay]

The rules were pretty clear. That is a fail of literally the 1st rule that was in place. There are a ton of other frauds you could choose to involve yourself in, too, if you don't mind the prospect of ending up in jail.

From: https://www.british-business-bank.c...unce-back-loans/faqs-for-small-businesses/#f2

The very act of incorporation could be construed as engaging in business and as the Ltd was established in the right period of time, there is pretty much nothing one could do to prove otherwise and certainly nothing the banks could check to gauge otherwise.

I was making a point in response to the text I quoted, which was to prove how easy the government made it for people who wished to defraud.

Had I been asked to set it up, let's say I would not have left that and a few other loopholes open to abuse.

 

[jimbof]

The very act of incorporation could be construed as engaging in business and as the Ltd was established in the right period of time, there is pretty much nothing one could do to prove otherwise and certainly nothing the banks could check to gauge otherwise.

I was making a point in response to the text I quoted, which was to prove how easy the government made it for people who wished to defraud.

Had I been asked to set it up, let's say I would not have left that and a few other loopholes open to abuse.

The wording is not "engaging in business" - but "business engaged in trading or commercial activity". There's no measure by which what you suggest could be construed as legit for an untraded dormant company bought off the shelf. Though of course folk may well have (and probably did) get away with extracting cash on the basis of it, it doesn't make it a question you could argue was answered legitimately and truthfully.

Luckily in many cases you'd expect this has left significant paper trail to the perps which will undoubtedly see many get caught who've had their hands in the till...

Unfortunately most of the "loopholes" and ways you would close them would leave too many legitimate firms not being able to access support, leading to even more cries than there already are about folk missed by the support offered. An example would be my own firm, which had (quite legitimately) not filed any tax returns at the time of COVID hitting in March 2020 in spite of that being more than 18months later than being first incorporated.

I don't think there are any easy answers. I'm sure that on balance, given the Govt can print money, the best option was to get the money out there as quickly as possible (still not quickly or broadly enough in many minds) and hoover up the lowlifes deciding to thieve it after the fact, which is pretty much what's happening now.

 

[Mr D]

The wording is not "engaging in business" - but "business engaged in trading or commercial activity". There's no measure by which what you suggest could be construed as legit for an untraded dormant company bought off the shelf. Though of course folk may well have (and probably did) get away with extracting cash on the basis of it, it doesn't make it a question you could argue was answered legitimately and truthfully.

Luckily in many cases you'd expect this has left significant paper trail to the perps which will undoubtedly see many get caught who've had their hands in the till...

Unfortunately most of the "loopholes" and ways you would close them would leave too many legitimate firms not being able to access support, leading to even more cries than there already are about folk missed by the support offered. An example would be my own firm, which had (quite legitimately) not filed any tax returns at the time of COVID hitting in March 2020 in spite of that being more than 18months later than being first incorporated.

I don't think there are any easy answers. I'm sure that on balance, given the Govt can print money, the best option was to get the money out there as quickly as possible (still not quickly or broadly enough in many minds) and hoover up the lowlifes deciding to thieve it after the fact, which is pretty much what's happening now.

Pretty sure some of those perps won't care about the paper trail. Particularly if the person it points to isn't involved!

 

[jimbof]

Pretty sure some of those perps won't care about the paper trail. Particularly if the person it points to isn't involved!

I'm sure it's unlikely that those who've been doing this on industrial scale have kept themselves sufficiently distanced to be untraceable ghosts... I'm aware of at least 10 arrests in the last few months alone. We're not talking about the grifting elites here...

 

[Mr D]

I'm sure it's unlikely that those who've been doing this on industrial scale have kept themselves sufficiently distanced to be untraceable ghosts... I'm aware of at least 10 arrests in the last few months alone. We're not talking about the grifting elites here...

At least 10 arrests. Out of ..... lots of loans given out. The fraud on BBL is estimated to be £23 billion.
Bounce Back Loan Scheme corrupted by fraud | AccountingWEB

Not saying untraceable ghosts - but not hard to get the paperwork to open a bank account. Not hard to get stuff to open a company.
Someone wanting to use your name - would they find it easy?

Fraud can be a bit more than filling in a bank form for money you really should not get.