UK authorities are investigating fraudulent claims made under the government’s Bounce Back Loan scheme (BBLS). Investigations into bounce back loan fraud are underway with arrests already been made. The National Investigation Service saying that “numerous” crackdown operations are planned across the country.Why Is HMRC Using The Criminal Prosecution Route More Often?

Bounce Back Loan Fraud

The BBLS is one of the many financial support schemes implemented by the government since the onset of the Covid-19 pandemic. Struggling businesses have been able to claim up to £50,000 to help them stay afloat. The loan must be paid back within six years, although this can be extended to 10 years.

Due to the urgency of the situation, many of the applications were processed without the proper due diligence taking place. Now the authorities are concerned that many applications were made fraudulently, meaning the money will never be repaid. This could cause the taxpayer to lose billions of pounds.

Anyone who deliberately abuses the BBLS could be convicted of fraud. The BBC also found that some people are selling bogus companies online and encouraging buyers to make a fraudulent claim under the BBLS. This prompted the Treasury to say that giving advice on getting a fraudulent loan could be a crime.

Phil Butt, investigations manager at the National Investigation Service (NATIS) said: “my message to those that are committing this crime is that we will be investigating you.” NATIS is a specialist unit tracking down ‘Covid-19 fraudsters’, and is making unannounced visits to suspects’ homes, with many more operations in the pipeline.

Fraud Investigations and Director Disqualification

Investigations into Covid-19 fraud are also being conducted by other UK authorities, with the National Crime Agency focusing their efforts on large-scale scams. This has already led to arrests, including that of three men accused of a £6 billion Bounce Back Loan fraud. HMRC and banks are looking into smaller scale fraud.

Fraud can lead to both civil and criminal penalties, while company directors who behaved fraudulently may be held personally liable for their actions. Directors may also face proceedings as a result of the Ratings (Coronavirus) and Directors Disqualification (Dissolved Companies) Bill, which is currently making its way through Parliament. This will allow HMRC and the Insolvency Service to take action against directors who dissolved a company improperly while leaving outstanding debts unpaid, such as a Bounce Back Loan.

Government statistics show that three Bounce Back Loans were issued every minute since May 2020. There are, therefore, a considerable number of small to medium sized businesses who have benefitted under the scheme. Given the impact of the pandemic, some companies may struggle to cover the repayments, or may have gone under since claiming the loan.

Advice for Business Owners

All businesses should prepare themselves for HMRC compliance checks and additional investigations. If genuine errors were made and you take early action to remedy the situation, the authorities will likely show leniency. However, if evidence of deliberate abuse is found or you have failed to discharge your director duties, then further action will be taken.

If you receive any communications from a UK authority in relation to fraud, or are concerned you may receive these communications in the near future, we recommend that you speak to a solicitor at the earliest available opportunity. Altion Law offers an initial consultation service to discuss these concerns.

If you would like to have a free confidential discussion with a member of our team, please either make a Free Request For Call Back or call us directly on 01908 414990 and we will be pleased to help you.