800+ Directors Under Fire for Bounce Back Loan Misuse

Business owners deemed to have abused the Bounce Back Loan scheme are being targeted by The Insolvency Service. The government body revealed that it has already had over 800 company directors banned after irregularities were spotted from their loan usage.

Over the course of the 2023-24 tax year, The Insolvency Service pursued disqualifications for 831 business owners on account of Covid support scheme abuse. This marked a substantial 80% increase on the prior year’s figures.

Since The Insolvency Service started investigating Bounce Back Loan misconduct in 2021, it has successfully pursued directorship bans for 1,430 company owners. Their uncovering of 58% of that number just over the last tax year suggests that they’ve begun to step up their efforts even further.

A key priority

Their Chief Executive, Dean Beale, said on the matter that “tackling Bounce Back Loan misconduct is a key priority for The Insolvency Service and we are determined to use all our available powers to remove rogue company directors from the corporate arena”.

He added that The Insolvency Service “have teams dedicated solely to investigating Bounce Back Loan misconduct that are committed to taking action against those who provided misleading information to receive money they were not entitled to”.

The Insolvency Service’s press release on the issue went as far as to name and shame a handful of errant business owners who have since been disqualified from being a director. Of the subjects mentioned, it details a 42-year-old that claimed separate £50k and £40k loans while only actually being entitled to £4k.

After misrepresenting his turnover to secure the two loans, almost £80k the £90k he claimed found its way into his personal bank account, with no evidence to suggest any benefit to his company. He was later banned from directorship for 12 years.

Other accounts detail a maximum £50k Bounce Back Loan being transferred from one company to another unconnected company without explanation, and a director claiming another £50k loan for a dormant company. The director in question received a six-month ban.

Misrepresentation

Forbes Burton’s Senior Client Manager, Ben Westoby explained that “the Bounce Back Loan Scheme was intended to help small-to-mid-sized companies navigate the hit to business brought about by the COVID-19 pandemic. It provided low-interest loans from £2k up to a maximum of £50k to help keep businesses afloat.

“The maximum loan amount a company could take out was worked out at 25% of their turnover. Unscrupulous directors saw the uncertainty at the time as an opportunity to misrepresent their turnover to claim bigger loan amounts. Unfortunately, others used the loan to prop up their personal finances, with little or none of the loan amount actually reaching the business it was intended for”.

With The Insolvency Service actively looking into bank accounts and company accounts to identify any wrongdoing, those that have misused their loans are likely to be uncovered soon. Increased efforts from the government body could yet see even more directors banned in 2024-25 than the 800+ just reported.

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