Insolvency Practitioners Duties Regarding Bounce Back Loan Abuse!

but it seems incredibly sloppy to be reporting this as a breach when it doesn't constitute one on the basis of the facts presented.
the IP would have gone through the bank account & vat returns if registered so they would have a fair idea that the turnover was nowhere near £195K for the calendar year.

Needed to sell more of those Michael Jordon trainers he wore when first started professional career;)
 
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IanSuth

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Apr 1, 2021
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I've seen two of these now where the information about what they had actually turned over that is reported in these summaries doesn't actually relate to the calendar year 2019. I mean, last time I checked 2019 had 4 months after August. Now I'm not saying the cases are wrong, or defending the indefensible, but it seems incredibly sloppy to be reporting this as a breach when it doesn't constitute one on the basis of the facts presented.

I assumes it means that companies financial year - so in this instance a company whose last complete financial yr was Sep 18-Aug19
 
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jimbof

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Apr 11, 2020
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the IP would have gone through the bank account & vat returns if registered so they would have a fair idea that the turnover was nowhere near £195K for the calendar year.
You'd certainly hope that is the case, but when setting out an argument for the premise on which the action is taken, it should be on a sound point. What I've seen twice now are examples of non-sequitur logic which does make you wonder. Of course I want all the micktakers to get what's coming to them, it's my taxes they're pinching, but equally I'd hope everyone who is taken to task is on a sound basis, and it would be worrying if we hear of people being wronged in a frenzied sweep-up.

I assumes it means that companies financial year - so in this instance a company whose last complete financial yr was Sep 18-Aug19
No, the company financial year had nothing to do with bounce back loan applications. The terms were very clear they related to the 2019 calendar year.

https://www.ukbusinessforums.co.uk/...over-calendar-year-or-latest-accounts.408974/

There are some comments at the end that haven't aged very well...
 
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6 Years disqualification for this one - looks like 6 years is going to be the standard for BBL abuse.
Novel though this one, took all of the BBL out in cash, must have been on the coffee rota list at the local Bank Branch;)

MS, (“Mr S”) failed to ensure that BL Ltd (“BL”) maintained and/or preserved adequate accounting records for the period 31 December 2019, (the last prepared accounts recorded at Companies House), to Liquidation on 19 February 2021, or in the alternative, following liquidation he failed to deliver up to the Liquidator adequate records as were maintained and/or preserved. As a result it has not been possible to determine: The reason for ATM cash withdrawals amounting to £13,654 between 01 January 2020 to 24 July 2020 and whether these were used for the benefit of BL.

The reason for counter withdrawals amounting to £45,500 between 04 January 2020 and 11 June 2020 and whether these were used for the benefit of BL.

The reason for further counter withdrawals amounting to £50,000 over 5 days between 30 June 2020 and 04 July 2020 and whether these were used for the benefit of BL.

The reason for a final counter withdrawal of £7,000 on 10 August 2020 and whether this was used for the benefit of BL.

Whether 5 invoices totalling £24,908.10 and 17 wage slips totalling £14,062.10, covering a period between 09 January 2020 to 30 June 2020, delivered up to the Liquidator on 14 June 2021, were paid by BL in cash, leaving at least £77,183.80 in unaccounted cash withdrawals between 01 January 2020 and 10 August 2020.

Whether the turnover of BL was sufficient to qualify for a £50,000 Government Bounce Back Loan, received on 19 June 2020. Whether the £50,000 Government Bounce Back Loan was used wholly for the benefit of BL. The quantum of assets distrained by the landlord of the trading address.
 
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6 Years disqualification for this one - fraudulent application for BBL. Just plucked the £81K figure out of thin air for turnover for calendar year to Dec 19.

RM (Mr M) caused F Limited (hereafter referred to as “F”) to apply for and accept a Bounce Back Loan of £10,000 when not eligible for such support in that:

• On 18 May 2020 F applied for a Bounce Back Loan of £10,000 from Barclays Bank. The application form was completed by Mr M on behalf of F.

• On the application form F declared turnover of £81,000 for the calendar year 2019.

• The loan terms allowed F to apply for a loan up to 25% of the annual turnover of the company from £2,000 - £50,000. • From examination of the bank account (which Mr M states is the sole bank account for F) income received into the account totalled £3,246.71 in 2019.

• No company records have been provided to support the stated turnover of £81,000 and no explanation of why the bank account does not reflect the turnover stated on the application form has been provided.

• On the application form F declared that it was not insolvent or a business in difficulty on 31 December 2019. At this time F had lost both of its contracts and owed HMRC more than £26,000 for VAT and £81,000 for Corporation Tax.
 
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11 Years Disqualifiaction for this one - over egging turnover for BBL and not for econimic benefit of company

Not a bad deal through took £50K BBL only paid £25K back to Liquidators!

A (“Mr A”) caused S A Limited (“S”) to fraudulently apply for a Government Backed Bounce Back Loan (“BBL”) when he knew or ought to have known that S was not eligible for that loan. Further, Mr A has failed to provide accounting records evidencing that the BBL funds were used for the economic benefit of S, which was a requirement of the BBL scheme, in that:

1. Mr A was a director of S from 03 December 2018 until liquidation.

2. On 17 May 2020, Mr A applied for a BBL of £50,000 on behalf of S. In the application form, Mr A declared that S’ up to date annual turnover was £200,000.

3. The BBL scheme allowed businesses affected by the Coronavirus pandemic to apply for a government backed loan of between £2,000 and £50,000, up to a maximum of 25% of turnover in the calendar year 2019. Where a business had not traded for the whole of 2019, a business could provide an estimate of their annual turnover.

4. The first payment that can be seen going into S’ bank account from a customer was a payment of £100 on 22 August 2019, indicating that S did not trade for the whole of the calendar year 2019 and so was eligible to provide an estimated figure for annual turnover on the BBL application form.

5. Total customer receipts into S’ bank account from 22 August 2019 to 17 May 2020 were £3,110, an average of £346 per month. The highest monthly income S received from customers was £640 in February 2020. Using the February 2020 figure as an estimated maximum monthly income gives annual turnover of a maximum of £7,680.

6. Mr A has failed to provide any evidence that the estimated annual turnover of £200,000 was appropriate. Based on the available records, annual turnover was a maximum of £7,680. This was below the turnover level of £8,000 that was required in order to obtain the minimum BBL of £2,000 and so S was not eligible for the BBL scheme.

7. On 21 May 2020, £50,000 was credited to S’ bank account as a result of the BBL application.

8. Mr A has stated that the BBL funds were used to fund marketing and advertising services provided by four self-employed individuals (“the four individuals”), who were not connected to the directors of S. Mr A’s co-director later confirmed that one of the four individuals who received funds from S was a member of his family.

9. The four individuals each received monthly payments from S of £2,000 between 26 June 2020 and 26 October 2020, with two of them receiving an additional payment of £1,900 each on 26 November 2020, a total of £43,800.

10. S bank statements show that after 21 May 2020 when S received the BBL funds, the only payments into S’ bank account from customers were three payments of £100 each made in July 2020, September 2020 and October 2020, all from the same customer. S’ bank statements show that this was an existing customer of S and so this was not new custom generated by the expenditure stated to be on marketing and advertising. Mr A has not provided evidence of any new custom generated by the £43,800 he claims was spent on marketing and advertising between 26 May 2020 and 26 November 2020.

11. In late November 2020, Mr A sought professional advice into the affairs of the company and on 19 January 2021 S went into liquidation.

12. The bank who gave S the BBL confirmed that at the date of liquidation the outstanding balance on the BBL was £49,846.

13. At the date of liquidation S had assets of £168, liabilities of £50,046 and a deficiency to creditors of £49,878. 14. The Liquidator has advised that Mr As co-director has repaid £25,000 in full and final settlement of the claims against both directors, reducing the deficiency to creditors to £24,878
 
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Wonder what the Liquidator/Insolvency Service is going to report on this one?

BOBBY Davro’s company has gone bust owing over £92k to creditors, including £32,100 to HMRC, after the comedian complained earlier this year that the pandemic had left him broke.

In January, the desperate star said the lockdowns had left him so skint that he’d been forced to take out a government bounce-back loan and didn’t know how he was going to pay the bills, adding: "There is no work. I only did four gigs last year. I can’t earn anything. I haven’t been able to earn money for a year. It’s dreadful.”
 
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Only 4 year ban for this one - reduction from the normal 6 year ban as only took £20K for himself!

Thought the company had to be in existence before the 1 March 20 to apply for BBL?

On 30 September 2020, (“Mr S”) caused SAM Ltd to apply for a Bounce Back Loan of £50,000 and utilised at least £20,000 of the funds for his personal benefit and not to provide economic benefit to SAM, which was to the detriment of SAM’s other creditors, in that:

SAM was incorporated on 6 May 2020.



• On 3 July 2020 Mr S lent SAM £18,300 as working capital.


• SAM commenced trading on 6 July 2020 when it took over the ongoing work of Mr S's previous sole proprietorship business (including a project where the customer had given notice on 1 July 2020 that an overpayment of £56,840 had been made.)

• The same customer issued an invoice dated 30 September 2020 for the overpayment of £42,028 (including VAT).

• On 30 September 2020, Mr S caused SAM to apply for a Bounce Back Loan of £50,000.

• On 1 October 2020, SAM received £50,000 into its bank account in relation to the Bounce Back Loan.

• On 2 October 2020 Mr S received £3,000 described as salary.

• On 2 November 2020 Mr S received £20,000. •

On 2 November 2020 Mr S received £3,000 described as salary

• SAM ceased to trade on 9 November 2020.
 
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7 Years Disqualification for this one - did manage to leave, however, £139 of the BBL for the benefit of creditors, fair play!

Between 03 May 2020 and 08 June 2020 RP (“Mr P”) caused RC Ltd (‘R’) make payments to himself totalling £25,000, which were to the detriment of R's creditors and caused R to become insolvent.

Mr P caused R to apply for a Bounce Back Loan, (“BBL”) in the amount of £41,000, which was received into R’s bank account on 13 November 2020.

Between 30 December 2020 and 10 February 2021 payments totalling £40,861 were made to and on behalf of Mr P, which were not for the economic benefit of R and were in breach of the terms of the BBL.
 
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7 Yrs Disqualification for this one - told by IP company was insolvent and then promptly applied for BBL for £50K swiping £38K for himself.

On the 27 July 2020, CP (“Mr P”) caused (“Pick It”) to apply for a Bounce Back Loan (“BBL”) of £50,000 at a time when he had been informed by an insolvency practitioner that Pick It appeared to be insolvent and as such he should ensure any continued trading did not worsen the position of its creditors.

On 16 June 2020, Mr P was advised by an Insolvency Practitioner that Pick It was insolvent and that any continued trading should not worsen the position of its creditors.

• On 27 July 2020, Mr Pearson applied for a government BBL of £50,000, on behalf of Pick It.

• On 28 July 2020, the £50,000 BBL funds were paid into Pick Its business bank account. •

On the same date, Mr Pearson transferred £38,000 of the BBL funds from Pick Its business bank account into his personal bank account, contrary to the terms of the BBL agreement which state that BBL funds should be used for the economic benefit of the business.

• Pick It ceased trading on 22 October 2020. At liquidation on 29 December 2020 the BBL of £50,000 remains outstanding and other creditors are owed £153,628.
 
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