Are Illicit COVID Business Loans Finally Being Recouped?

COVID loans

The recovery efforts from UK government to recoup the massive £80 billion of business support funds has taken a backseat on newsstands recently. With the government crumbling, the cost of living crisis wreaking havoc on UK households, as well as the ever-present destruction in Ukraine, not much has been made regarding the estimated £15 billion of taxpayer money used to fund illicit businesses and owners.

However, recent headlines suggest the backlash from the illicit COVID loans and job support scheme applications have been high up on HMRC and the Insolvency Services agenda over the last few months. The Financial Times reported 1 in 3 UK company directors struck off in recent months were found to have abused the government’s coronavirus loan schemes or job support programmes.

During COVID, fraudulent activity was rife including many directors setting up new companies to secure bounce-back loans, as well as businesses falsely inflating revenues to increase the funding awarded. The law firm Pinsent Masons have stated 140 directors were banned in the year to 31st March 2022, with another 37 banned in April and May 2022 alone, as the Insolvency Service increases their investigations into striking off directors who have burned a huge hole in the taxpayer’s pockets.

With all this in mind though, what does this mean for the UK businesses who did secure essential funding during the extremely challenging times and used it for the greater good of their business and the economy? We examine the protections you need in your business should HMRC choose to investigate, and what other options are out there to seek legitimate growth and future funding.

Enquiries Are Up, So Should Your Protection

Last year at the Spring Budget, it was announced the government would invest over £100m in a taxpayer protection taskforce of 1,265 HMRC staff to combat the fraudulent claims of Covid-19 support packages. At Nordens, we’ve seen first-hand the number of enquiries quickly increase into businesses, even if those businesses have legitimately and fairly secured COVID business loan funding. These enquiries from the Insolvency Service naturally costs the business, or individual, investigated a fair sum of money and time.

We understand that business compliance is a costly distraction with big implications which prevents you from doing what you do best. This is why we heavily advocate for this form of safeguarding to not only protect you but to give you piece of mind that should HMRC come calling for any reason whatsoever you are prepared and willing to co-operate smoothly. We believe that HMRC enquiries into businesses will significantly continue to increase, especially with the government borrowing deficit the highest it’s ever been.

Our Tax Investigation Service will include representation from us in the event of an HMRC investigation and has zero excess. Nordens will deal directly with HMRC on your behalf, giving you the peace of mind to focus on your business without the concern over unknown additional fees. We recommend that you take advantage of this valuable protection due to the potential increase in HMRC investigations. Early professional representation is an essential part of your defence, this takes time, expense and flexibility on our behalf.

Our Tax Investigation Service will include the following:

  • Representation from us in the event of an HMRC investigation, with zero excess and £100,000 fees indemnity.
  • Peace of mind.  We will deal directly with HMRC on your behalf safeguarding you from the concern and stress of unknown additional fees.
  • Access to experienced solicitors who will advise you should this be necessary.

If this sounds of interest, or you require more information of protecting yourself through or Tax Investigation Service, please get in touch with or Administration Manager, Marissa Jerrard, who will answer any of your queries directly.

Planting The Seeds For Growth

Traditionally, funding for your business has ultimately been used to achieve growth or scalability in your business. During COVID, the majority of the government backed emergency loans and packages were admittedly used on a business survival basis, particularly as most businesses weren’t able to operate or were limited in their capacities.

Most, if not all, of the financial lenders that are offering funding will no doubt have a cheaper alternative than the government emergency loans we saw during the pandemic. Lenders are encouraged to offer their own funding packages which are usually less rigid and more flexible to the client in matching to their specific needs, whether that’s to do with funding amount, interest rates, or payback times.

This is crucial to now, as unlike the Recovery Loan Scheme (RLS) it would not be government backed, however it will be cheaper as well as enable a more affordable option and a way forward for your business.

Through our Corporate Finance division, we’ve seen hundreds of business owners succeed after acquiring that cash injection to take their business to the next level. If this sounds of interest, then please get in touch with us and we’ll assess your options and work with you.

As well as this, placing yourself in the best strategic position as possible maximises the chances of success in the long term. Regularly forecasting and scenario planning, at least once a month, is something which can completely transform your business setting the wheels in motion for the next chapter in your business’ journey.

There’s so much that can be done from a strategic advisory angle that could just be the key to unlock the success your business is craving. Nordens’ Strategic department is dedicated to working with business owners to identify the steps needed to achieve its goals.

We hope this has outlined to you the scale of HMRC enquiries into fraudulent business owners and how to protect yourself should HMRC come knocking. If you require any further information on any anything mentioned, please don’t hesitate to get in contact with us at Nordens where one of our trusted advisors would be happy talking you through your query.