Bounce Back Badness Checks
The Treasury said rigorous checks were put in place as part of government action to prevent bounce back badness. This does not, therefore, explain why those checks do not appear to have succeeded in ensuring that fraud did not occur on an industrial scale.
In a Policy Paper called “Government Action on Fraud in Covid Support Schemes” updated on 3 March 2022 issued by HM Treasury, it said:
Fraud is totally unacceptable, and we’re taking action on multiple fronts to crack down on anyone who has sought to exploit our schemes and bring them to justice.
Tough talk making all the right noises but what about the tough action? The evidence as at 3 March 2022 is that the National Investigation Service only made 49 arrests and the National Crime Agency 17. Furthermore, the Insolvency Service has to date disqualified 106 Directors, issuing 48 bankruptcy restrictions and 13 companies wound up in the public interest.
Such figures look a fraction thin in the context of over 1.4 million bounce back loans being issued in England and Wales alone.
In the Policy Paper the government said that the schemes were designed to prevent as much fraud as possible before any payments were made, while still quickly supporting those who needed it in unprecedented circumstances. The government Paper did however say that lenders stopped nearly £2.2bn in potential fraud from the bounce back loan scheme which demonstrates the potentially staggering risks of loss involved here.
Taxpayer Protection Taskforce To Tackle Bounce Back Badness
According to the Public Accounts Committee’s 37th report into HMRC Performance in 2020-2021, in March 2021 the government said it was going to tackle Covid-19 finance fraud by way of setting up a Taxpayer Protection Taskforce of 1,265 HMRC staff. This would cost more than £100 million.
The Financial Times reported in November 2021 that HMRC’s accounting officer had told it that HMRC was currently planning to finish its recovery action at the end of 2022–23. HMRC subsequently told the Public Accounts Committee that it expects to settle some of the more complex cases after 2022–23.
However, the Public Accounts Committee report suggested that HMRC had given the impression to it, that chasing fraudulent payments and errors was too difficult and too resource intensive. It learnt that of c.£6 billion lost only around £1.85 billion was estimated to be recovered.
Covid Loan Fraud Questioning By Parliament
Lord Agnew was questioned on 15 March 2022 by the Business, Energy and Industrial Strategy Select Committee (“Committee”) and he said he thinks that the British Business Bank had fraud advice and simply did not follow it. He says that the Board of the British Business Bank should be sacked.
In what appears a classic case of passing the parcel, there appears according to Lord Agnew a system whereby the Treasury delegated matters relating to Covid schemes to the Department of Business, Energy and Industrial Strategy who in turn then delegated them onto the British Business Bank.
He criticised the oversight of the British Business Bank which he said was regulated by the Department of Business Energy and Industrial Strategy, who have no experience in the regulation of a bank and as a result, it was not watched:
BEIS has no experience in the regulation of a bank. No one was watching it properly. The accounting officer of BEIS does not have a clue about banking.
And when the Committee asked about leadership he certainly pulled no punches saying:
The fish rots from the head down….The Chancellor came up with this intervention, which was a perfectly legitimate one. He reasonably assumed that the machine would be capable of implementing it in a reasonable way.
He would have said something like, “We want to have a light touch to get this money out quickly.” This is the analogy I use: if I find you on the side of the road and you have had a heart attack, and I get you into an ambulance and say to the ambulance driver, “Get to the hospital now,” I do not expect the ambulance driver to drive through a bus stop and kill half the people on the way to the hospital. That is the way that it seems to have been interpreted. I do not blame the Chancellor for that. He cannot possibly be over all the details. That is why the administrative machine should be taking responsibility.
Oliver Elliot Comment About Bounce Back Badness
Some people with the benefit of highlight now might consider bounce back badness to be a case of madness.
We disagree. There is no doubt that there was a delicate dilemma for the government. It had, on the one hand, to balance getting massive support to businesses quickly as the Pandemic panic set in leaving commercial activities in certain industries heavily constrained and on the other side preventing widespread abuse of the system. It appears frightful that so much public money may now have been hoovered up in a manner that leaves the taxpayer with little or no recourse.
There is however now the really damaging prospect that needs to be guarded against, as the extent of bounce back badness becomes clearer. Not every company Director who tried to bounce back should be tarred with this bad brush. Most tried to save their businesses that declined through no fault of their own as Covid-19 sprouted.
Cannot Repay A Bounce Back Loan?
If you cannot repay a Bounce Back Loan with your company ceasing to trade and you want to close it down then we can help you with that process. We are fully licensed to enable you to consider placing a company into Creditors Voluntary Liquidation and if it is right for the circumstances. This may enable you to make a fresh start but in any event, the Liquidation can look to address the Bounce Back Loan. Contact us for a quote and free initial confidential advice.
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