BBL fraudsters being targeted

**eek** · 1 September 2021, 13:00

Originally posted by ladymuck View Post

Well it would seem those who took out a BBL in the hope of dodging repayment are in for a bit of a shock

https://www.contractoruk.com/news/00...isnt_next.html

...new legislation has been introduced to grant special retrospective powers to The Insolvency Service to investigate directors for BBL fraud, even after company strike-off.

As a result, the Insolvency Service is gearing up to actively tackle BBL fraudsters who have dissolved their businesses, despite now being under suspicion of fraudulently obtaining Bounce Back Loans or actively neglecting the strict terms under which the loans were granted.

In raising their gloves to deliver a centre-stage knock-out, this early deterrent is a preview of what’s to come from the Insolvency Service for ‘unfit’ directors, given two separate companies, LV Distributions Ltd and SIO Traders Ltd, got thumped just last month.

Neither company ever traded so it really was just fraud.

What is surprising is that the only punishment seems to be not being allowed to be a director rather than jail.

**DaveB** · 1 September 2021, 13:26

Originally posted by eek View Post

Neither company ever traded so it really was just fraud.

What is surprising is that the only punishment seems to be not being allowed to be a director rather than jail.

I think that's what the new legislation is intended to address. Jail and personal liability for the funds owed are being added to the penalties available from action taken by the Insolvency Service as well as making it retrospective to catch those who dissolved companies before they could be investigated.

In the case of these two it was before the new law comes into effect so any criminal proceedings for the fraud would have to be brought separately against the directors.

**northernladuk** · 1 September 2021, 14:52

Gonna be interesting to see what the details of fraudsters are. Obviously anyone with a hole in their bum will know there will be people committing pure fraud like when people didn't even have a LTD at the time. It's been well documented in the news about rogue accountants making applications etc.

But the fraud line could be pretty grey and will depend on HMRC's interpretation?

It says in that article.

What constitutes Bounce Back Loan misuse?

A Bounce Back Loan can only be used to provide an economic benefit to the business – not for personal use.

Using a Bounce Back Loan to remunerate staff at an increased rate is impermissible.

When taking out a Bounce Back Loan, you were instructed to declare that your business had been ‘adversely impacted’ by the coronavirus pandemic, however, not that it was in financial difficulty. If your company was in financial difficulty when applying for a Bounce Back Loan, an insolvency procedure should have been pursued.

There are a lot of contractors that applied for it that were in contract and running along quite nicely. They weren't 'adversely impacted' so will HMRC view this as fraud?
There are a load of people that were on the bench before covid and claimed it citing they were impacted, when they weren't, they were just on the bench like we do. They used the loan to pay themselves. Is that fraud (as HMRC call it)?
There are people on the bench that claimed the loan and shut the company with the intention to write the loan off, like that guy we had not so long ago. The loan was never used to help the business so is this fraud?

On the extreme end HMRC goes after people that are carrying blatant fraud so we don't need to worry but there does also seem to be a grey area where many contractors might have not met the rules. Who will HMRC really go after?

**eek** · 1 September 2021, 14:57

Originally posted by northernladuk View Post

Gonna be interesting to see what the details of fraudsters are. Obviously anyone with a hole in their bum will know there will be people committing pure fraud like when people didn't even have a LTD at the time. It's been well documented in the news about rogue accountants making applications etc.

But the fraud line could be pretty grey and will depend on HMRC's interpretation?

It says in that article.

There are a lot of contractors that applied for it that were in contract and running along quite nicely. They weren't 'adversely impacted' so will HMRC view this as fraud?
There are a load of people that were on the bench before covid and claimed it citing they were impacted, when they weren't, they were just on the bench like we do. They used the loan to pay themselves. Is that fraud (as HMRC call it)?
There are people on the bench that claimed the loan and shut the company with the intention to write the loan off, like that guy we had not so long ago. The loan was never used to help the business so is this fraud?

On the extreme end HMRC goes after people that are carrying blatant fraud so we don't need to worry but there does also seem to be a grey area where many contractors might have not met the rules. Who will HMRC really go after?

Potentially anyone and everyone who doesn't pay the loan back.

**DaveB** · 1 September 2021, 15:03

Originally posted by northernladuk View Post

Gonna be interesting to see what the details of fraudsters are. Obviously anyone with a hole in their bum will know there will be people committing pure fraud like when people didn't even have a LTD at the time. It's been well documented in the news about rogue accountants making applications etc.

But the fraud line could be pretty grey and will depend on HMRC's interpretation?

It says in that article.

There are a lot of contractors that applied for it that were in contract and running along quite nicely. They weren't 'adversely impacted' so will HMRC view this as fraud?
There are a load of people that were on the bench before covid and claimed it citing they were impacted, when they weren't, they were just on the bench like we do. They used the loan to pay themselves. Is that fraud (as HMRC call it)?
There are people on the bench that claimed the loan and shut the company with the intention to write the loan off, like that guy we had not so long ago. The loan was never used to help the business so is this fraud?

On the extreme end HMRC goes after people that are carrying blatant fraud so we don't need to worry but there does also seem to be a grey area where many contractors might have not met the rules. Who will HMRC really go after?

Good questions, but it's not HMRC who make the decisions on this. The Insolvency Service are a Govt. agency in their own right with considerable powers to investigate offences in relation to bankruptcy, debt and company failures.
https://www.gov.uk/government/organi...-service/about

My guess is that all the above scenarios will qualify as fraud since they breech the conditions for receipt of the BBL's.

Legal definition of fraud is :

"wrongful or criminal deception intended to result in financial or personal gain."
If you lied on your application for a BBL in order to get the money, and then didn't pay it back. That's Fraud.

**NowPermOutsideUK** · 1 September 2021, 15:41

Bear in mind that fraud took be proved to a criminal standard is not easy. It requires real evidence that there was a conspiracy and planning of fraud.

so someone who opened a shell ltd took a 50k Bbl and lied a out their income and then shut it down is fraud.

taking the Bbl because you have been effected by covid (even the worry about money drying up) or £1 not being paid on time is much different

also remember the insolvency agency is toothless in the past and will chase the easy obvious crooks.

those contractors who took the loan whilst being benched are perfectly fine. One could argue they would have as urged a job more quickly without covid

**northernladuk** · 1 September 2021, 15:56

Originally posted by DaveB View Post

Good questions, but it's not HMRC who make the decisions on this. The Insolvency Service are a Govt. agency in their own right with considerable powers to investigate offences in relation to bankruptcy, debt and company failures.
https://www.gov.uk/government/organi...-service/about

My guess is that all the above scenarios will qualify as fraud since they breech the conditions for receipt of the BBL's.

Legal definition of fraud is :

"wrongful or criminal deception intended to result in financial or personal gain."
If you lied on your application for a BBL in order to get the money, and then didn't pay it back. That's Fraud.

So probably focussing on people who didn't pay it back for whatever reason first. I think most of us will be safe from that. Looking back at the 50k loan thread back in the day there are people talking about using it for DL's and all sorts in there.

I must admit I thought they would have kicked off a furlough fraud process by now. The number of stories I hear from people going back in to work a few days here and there while on furlough is endless. If they do I think a number of contractors are going to get caught by that one as well but no real news about that so far.

**ladymuck** · 1 September 2021, 16:04

I think the pain will kick in for those defaulting or otherwise avoiding paying. Then perhaps a bit of a look at those deferring payments or extending the term.

Anyone actively repaying as they ought to should be pretty safe.

**ladymuck** · 1 September 2021, 16:06

Originally posted by northernladuk View Post

So probably focussing on people who didn't pay it back for whatever reason first. I think most of us will be safe from that. Looking back at the 50k loan thread back in the day there are people talking about using it for DL's and all sorts in there.

I must admit I thought they would have kicked off a furlough fraud process by now. The number of stories I hear from people going back in to work a few days here and there while on furlough is endless. If they do I think a number of contractors are going to get caught by that one as well but no real news about that so far.

The later furlough schemes did allow for some working with the furlough payment being proportional to the amount of time not worked.

Whether companies took care to calculate that properly is another matter.

BBL fraudsters being targeted