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Insolvency Service Action Against COVID-19 Fraud

The Insolvency Service has taken decisive action against businesses that were found to have abused COVID-19 financial support.  A company director was disqualified for 12 years and five other companies wound-up in the public interest after fraudulently claiming COVID-19 business support.

Raashid Khan fraudulently claimed £50,000 through the Bounce Back Loan Scheme (BBLS) before transferring the full amount out of the company’s account to himself just days before his company went into administration.  Despite his company accounts being frozen (as it was due to be shut down), Khan forged a document to convince his bank that the winding up order had been revoked.  He has now been disqualified for 12 years.

Since February 2021, the Insolvency Service has successfully petitioned the Courts to wind up five limited companies that have been involved in abusing government loans.  These include a furniture retailer in Manchester, and two Glasgow-based companies, for which no legitimate business activity was identified since at least January 2020.

It is very positive to see the Insolvency Service taking action to wind up businesses that have fraudulently claimed COVID-19 support.  Especially as we’ve heard of lots of companies last year taking financial support and then winding up their businesses thinking that’s a failsafe scam to get free money!

These scammers need to beware as NEW POWERS are coming which will enable the Insolvency Service to investigate dissolved companies, so they are not safe.  If wrongdoing or malpractice is found, directors can face sanctions including a ban of up to 15 years, and potentially criminal prosecution.

The relevant powers aren’t yet in place, they’re currently before parliament and it’s almost inevitable they will be passed.

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