More directors banned for Covid support scheme fraud

The Insolvency Service is now banning around 35 directors a month for Covid support scheme abuse.

Between 1 April to 31 December 2022 312 company directors were banned from running businesses for abuse of Covid support schemes, the average length of director bans being 7.2 years. Directors disqualified in December 2022 received bans of eight years on average.

A man has been made subject to 10 years of bankruptcy restrictions for claiming a £50,000 Bounce Back Loan to which he was not entitled. He had run a wholesale clothing business in west London, trading as Ayesha Boutique, from April 2012 until his bankruptcy in December 2021.

In June 2020, he had applied for a Bounce Back Loan, stating that his turnover for the previous year had been £219,000.

However, he later filed a petition for bankruptcy, and was made bankrupt in December 2021 owing around £56,200, and triggering an investigation by the Insolvency Service. The investigation found that his actual turnover in 2019 was £21,604 – around 10 times less than he had claimed in the application.

He told investigators that around £34,200 of the £50,000 loan money was used to pay a supplier, including £19,000 for gold purchases, and around £8,900 in cash withdrawals. More than £15,500 had also gone to family members, which he said had been to repay loans.

Under the rules of the Bounce Back Loan scheme, the money was to be used for the economic benefit of the business, but the Official Receiver was unable to determine whether any of the £50,000 loan was used to support Ayesha Boutique.