The pandemic was an unprecedented time, many businesses relied on government financial support schemes to help keep them afloat including CBILS and Bounce Back Loans.
Whilst these loans helped many businesses to survive, others misapplied for more money than they were entitled, failed to meet the funding criteria or used the funds for other purposes.
It is estimated by HMRC that approximately £10 billion was lost due to fraudulent or incorrect applications for COVID support.
Use it or Lose it – About the Covid-19 Amnesty Scheme
The Government has recently launched a limited time only COVID-19 amnesty scheme. The voluntary scheme gives individuals and businesses until 31 December 2025 to return pandemic loan money which may have been claimed in error, no questions asked.
The COVID Counter-Fraud Commissioner has been clear “pay now to clear your conscience, or face the consequences.”
For businesses that may have concerns about how they applied for or spent their loans, this scheme offers an opportunity to set things right. Recently there have been numerous reports of business owners facing serious consequences for misuse of COVID loan funds including personal liability and even jail sentences.
What Should Businesses Do Considering the COVID-19 Amnesty Scheme?
Businesses applied for grants and loans during the pandemic quickly, and guidance and eligibility criteria were constantly changing. The applications were fast-tracked and subject to minimal scrutiny.
As a result, some applications may have contained errors such as overstating turnover, applying for multiple loans or using the loan for non-business purposes.
If you are uncertain about your application, here is what we recommend:
- Review applications made for COVID support
- Assess your eligibility
- Ensure the funds were used for legitimate business purposes
- If necessary, take advantage of the amnesty scheme and make voluntary repayments
The key is to act before the December 2025 deadline. HMRC and the insolvency service is ramping up efforts to recover COVID fraud funds, including setting up a whistle-blower website and increasing their investigatory powers next year. If you do not take action now, you may face prosecution or personal liability later.
Can I Apply to Strike Off My Company to Avoid Action Being Taken?
Back in December 2021 the government brought in extra powers to allow the insolvency service to investigate conduct of directors of dissolved companies. We previously wrote about snappily named new powers called the Ratings (Coronavirus) and Directors Disqualification (Dissolved Companies) Act 2021, click hear to read more: Warning for directors of dissolved companies.
What if You Can’t Afford to Repay a COVID-19 Loan?
If your business is unable to repay the COVID support loan, do not wait for HMRC to contact you – contact BRI Business Recovery and Insolvency for guidance.