Fraud regarding claims under Coronavirus Government assistance measures
Concerns surrounding the legitimacy of matters such as Bounce Back Loans in the UK are growing, as it has been reported that an increasing number of shelf companies are being bought for the sole purpose of gaining access to the government backed scheme.
The Bounce Back Loan Scheme was launched in May 2020, intending to support small and medium-sized businesses who are suffering as a result of the COVID-19 pandemic. The scheme allows businesses to borrow between £2,000 and £50,000, depending on their gross turnover.
The government guarantees 100% of the loan and there are no fees or interest to pay for the first 12 months. Beyond this, the interest rate is 2.5% per year.
The deadline to apply for the scheme was initially intended to be 30 November 2020, but this was extended to 31 March 2021, owing to the increasing number of COVID-19 cases at the back end of 2020.
A previous BBC investigation in September 2020 found that the checks carried out by the lending scheme were not secure, meaning the system was open to being exploited by setting up fake businesses on an industrial scale, or making applications for loans in other people's names. Also, the applications are very simple considering the sums involved, and hence there can be some grey areas as to legitimate eligibility under the scheme, and issues may arise as to whether an application was deliberately fraudulent or simply innocently erroneous.
Bounce Back Loans and shelf companies
As the situation surrounding the Bounce Back Loan Scheme has developed, it has now been discovered that there is an increasing number of shelf companies being bought to gain access to loans.
A follow-up report from the BBC revealed that limited companies registered before the pandemic are being advertised for sale on sites such as Facebook, eBay and Gumtree. The advertisements themselves state that the shelf company in question can be used to get a bounce back loan.
Selling a company online is perfectly legal, but the Treasury has said that doing so to get a Bounce Back Loan is not in the spirit of the scheme, as it was specifically set up to support firms who had been adversely affected by the pandemic.
If a shelf company is purchased for the sole purpose of accessing the loan, it is also very likely that the loan will not be paid back. A reporter from the BBC spoke directly to people selling such companies, with one claiming that he has sold over 700 since the Bounce Back Loan Scheme began.
What are the penalties for getting a bounce back loan with a shelf company?
A government spokesperson has already reported that anyone found to have made a fraudulent application for a bounce back loan is very likely to be prosecuted. This could include receiving a fine, imprisonment, or both.
However, it is not just those who directly apply for a fraudulent loan who could be prosecuted. The Treasury has stated that it is also a crime to give any advice about obtaining such a fraudulent loan.
This means that anyone who is selling a shelf-company and advertising it as a way of getting a bounce back loan could also be prosecuted.
What should you do if you are being investigated for Bounce Back Loan fraud?
If you find yourself accused of Bounce Back Loan fraud, advising on selling a shelf company for the purposes of committing fraud, or are concerned about a potential investigation, contact our specialist Serious Fraud and Business Crime solicitors today.
We have a team of specialist fraud defence solicitors who have a wealth of combined experience in handling a wide range of complex and high value fraud matters. We are able to advise individuals at every stage of the criminal justice process, from initial investigations, to potential court proceedings.
If you or someone you know requires post-prosecution advice, we also have a team of highly skilled criminal appeal lawyers who can lend their expertise.
Amongst our talented team, we have Partner, Alan Burcombe, who has handled many high profile and multi-million pound frauds. Partner, Ravinder Khumra, also specialises in all types of complex business and white-collar crime, including Financial Conduct Authority matters.