Repay Your Bounce Back Loan If You Shouldn’t Have Got One
Investigations are underway ...
Posted by Roger Eddowes on 24/02/2022 @ 8:00AM
The Government is checking the eligibility of businesses who claimed Bounce Back Loans and prosecuting anyone they feel has taken one fraudulently. There have been a number of high-profile cases recently ...
If you shouldn't have got a Bounce Back Loan, then repay it as soon as you can!
The Bounce Back Loan Scheme (BBL) was introduced by the Government when the COVID-19 pandemic first hit the United Kingdom to support businesses that were seeing their turnover plummet. The maximum loan was 25% of turnover or £50,000, whichever was the lowest value.
"But fraudsters took advantage of the BBL Scheme and claimed millions!"
One case shows international criminals claiming over £10 million in Bounce Back Loans via multiple shell companies using the funds in a massive money-laundering scheme. Cash eventually ended up in sports bags in the back of an Audi being delivered around the country. The two men behind the scheme were surveilled and prosecuted then received 33 years of jail time between them.
Another case highlighted a small business going after a local government contract using the Bounce Back Loan to inflate their financial resources which was discovered during due diligence before the contract was awarded. Again this was considered fraudulent by the local government department and the case was referred to the CPS.
A Treasury spokesman recently said: "Our Bounce Back Loan Schemes were designed to keep businesses running during a difficult time and we've been clear that the loans must be repaid and banks are undertaking appropriate precautions against fraud, including customer checks and the monitoring of transactions. Any fraudulent applications can be criminally prosecuted."
Many businesses took out a Bounce Back Loan, just in case, then never used it and I am advising those businesses to repay it in its entirety rather than just sit on the money. Thankfully most businesses in these circumstances are repaying to avoid being subject to a future investigation as they didn't really need the loan in the first place.
However, as the Government guaranteed 100% of the loans, and a great number of companies have either gone bust and been unable to repay, or directors simply 'phoenixed' the old companies into new ones to avoid repayments, HMRC and the Treasury have said they are taking Bounce Back Loan fraud very seriously, and we can expect many more prosecutions to be in the news soon.
My advice? If you can repay it in full now, then do so. If you can't, make sure you keep up with your repayments and don't mess your loan provider around.
Until next time ...
ROGER EDDOWES Business Godparent
Would you like to know more?
If anything I've written in this blog post resonates with you and you'd like to discover more about repaying your Bounce Back Loan, it may be a great idea to give me a call on 01908 774320 and let's see how I can help you.
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Roger trained at Edward Thomas Peirson & Sons in Market Harborough before working at Hartwell & Co, followed by Chancery, as a partner. He started Essendon Accounts and Tax with Helen Beaumont in 2014 as a general practitioner with a hands-on approach.
Roger loves getting his hands dirty, working with emerging, small-to-medium and family businesses to ensure they receive the best possible accountancy advice. Roger utilises an extensive network of business contacts to leverage the best guidance and practical solutions.
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