450 directors banned for Covid fraud

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(Last updated )

Nearly half of company directors were struck off in 2022-23 for cheating Covid-19 financial support schemes

From a total of 932 director disqualifications, over 459 were banned after abuse of Covid-19 financial support schemes, such as bounce back loans.

The Insolvency Service figures showed that directors found guilty of Covid-19 related fraud were hit with longer disqualification periods, with an average ban of seven years four months – up from five years and 10 months in 2021-22.

The number of disqualifications in 2022/23 was 16% higher than in 2021/22, which saw 804 directors disqualified.

In addition to civil enforcement action, criminal prosecutions were brought against six directors in 2022-23 for Covid-19 related misconduct. All the prosecutions resulted in a conviction and resulted in immediate imprisonment in one case.

Around 69 individuals also faced criminal charges brought by the Insolvency Service, and all were convicted. This was lower than last year when courts were clearing a backlog linked to the pandemic.

In the three most recent cases, Bahar Dag was sentenced at St Albans Crown Court to six years and six months in prison, with her husband Baris Dagistan sentenced to two years, having both pleaded guilty to offences involving a fraudulent application for a bounce back loan.

Dag had claimed the full £50,000 loan by stating the company’s turnover was £200,000. However, it was closer to £40,000.

In another case, Jubelur Rohman, sole director of Better Day Ltd, was disqualified as a director for 11 years following an investigation into his company’s £50,000 bounce back loan obtained in October 2020.

After his company went into liquidation in 2022 with debts over £150,000, the Insolvency Service found it had ceased trading in October 2019, with the restaurant currently at the address being owned by a different company.

Rohman took out over £40,000 in cash from the company’s bank account between October 2020 and March 2021.

Of the 932 disqualifications made in 2022/23, 249 (27%) were for between two and five years, 507 (54%) were for over five and up to 10 years, and 176 (19%) were for up to 15 years.

This is longer than in previous years, linked to an increase in the number of disqualifications related to Covid-19 financial support scheme abuse. In each of the previous 10 financial years, the average length had been between five years and five months, and six years.

The second most common allegation for director disqualification was unfair treatment of the Crown, which refers to HMRC. In 2022/23, 185 disqualifications were documented, from 298 in the previous year.

Unfair treatment of the Crown can range from cases where a director had made a conscious decision to pay other creditors and not HMRC, to cases where a director has defrauded or attempted to defraud HMRC.

The third most common allegation related to accounting matters, which saw a total of 147 disqualifications in 2022/23, up from 135 in 2020/21.

Dave Magrath, director of investigation and enforcement at the Insolvency Service, said: ‘These fraudsters are just the latest to find out that we will not hesitate to take firm action where we uncover such abuse, and this can ultimately result in a jail sentence.

‘The purpose of the bounce back loan scheme was to support businesses during the pandemic, but it is clear a minority of company directors chose to maliciously abuse the scheme and defraud the taxpayer. Our team of experts continue to work round-the-clock to bring these criminals to justice.’

For information on Covid in the workplace, visit BrAInbox today where you can find answers to questions like Can an employee work if they have Covid?

Read more from the latest BrAInbox Business News update:

Government rethinks Retained EU Law Bill following lack of support

Dentist worker loses £36k furlough case

CFOs more optimistic at growth prospects

SMEs owed £68k on average by suppliers

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