Disqualification and winding up for abusing Covid support packages 

A business that abused three separate Covid relief support schemes has been wound up by the Insolvency Service and two Directors who falsely claimed a £20,000 Bounce Back Loan (BBL) have been disqualified for a total of 16 years.

Keysholders Ltd, a training company was wound up for abusing a total of three Covid support schemes, starting with a £40,000 BBL for which it applied successfully in May 2020, even though there was no evidence that the business had been trading after March 2019.

Not content with this, the firm’s Director, Olayinka Adediran, applied for funding through the Coronavirus Business Interruption Loan scheme (CBILS) for £250,000 in August 2020.

Then in November 2020, the business obtained the first of four grants through the Job Retention Scheme (JRS), totalling £20,000.

These applications were made overstating the business’s turnover. The company stated that its turnover for the period ending 31 December 2019 had been £200,000, when in reality it was closer to £65,000.

Similarly, the application for funding through the CBILS showed a turnover of £550,000.

An Insolvency Service investigation found that the company could demonstrate no evidence of legitimate trading since at least March 2019.

Despite this the company had been claiming taxpayers’ money to which it was not entitled through Covid financial support schemes.

Roger Isaacs, Forensic Partner at Milsted Langdon, said: “The Insolvency Service has been cracking down on many businesses it suspects of abusing Covid support packages, including taking action to ban directors of these companies.

“However, some reports suggest that cases like these only represent the tip of a very large iceberg.

“There is always a careful balance to be struck between the costs of a prosecution when government coffers are strained on the one hand and the public interest benefits on the other.  Unless fraudsters have taken sums amounting to several hundreds of thousands of pounds, the stark reality is that it is unlikely that they will ever face prosecution.

“By contrast, bigger and more complex cases will be likely to justify not only investigation by the Insolvency Service and potential criminal proceedings but also forensic accountancy input and expert accountancy opinions on a range of issues, including whether the trade was fraudulent, how governments grants were used, and whether the underlying business may have been insolvent.”

Posted in The Forensic Blog.