Bounce Back Loans abused
Fraudulent firms across the UK have been ‘taking the p*ss’ as they’ve been abusing the Government’s Bounce Back Loan scheme.
That’s the view of Ian Carrotte of ICSM and swathe of financial directors, credit managers and accountants in the printing and allied industries.
Ian Carrotte said: “It sticks in the throat that legitimate firms have pulled up the drawbridge, cut costs and did what they had to do to survive the Covid-19 crisis but fraudsters have been taking and p*ss. Insolvent companies have been taking the cash when they had no hope of repaying it. It’s disgusting.”
Print Week’s Jo Francis reported on the demise of Rugby-based Pick it Pack It Send It Limited and its director Christopher Pearson.
She wrote: “On 16 June 2020, Pearson was advised by an insolvency practitioner that Pick It Pack It Send It was insolvent and that any continued trading should not worsen the position of its creditors. On 27 July 2020 he applied for a taxpayer-backed Bounce Back Loan of £50,000. The scheme was targeted at small businesses to help firms get through the pandemic. The maximum loan amount available via the fast-track funding was £50,000.
“The Insolvency Service report into Pearson’s behaviour said that on 28 July 2020, the £50,000 BBL funds were paid into Pick It Pack It Send It’s business bank account. On the same day, Pearson transferred £38,000 of the BBL funds from the company’s business bank account into his personal bank account, ‘contrary to the terms of the BBL agreement which state that BBL funds should be used for the economic benefit of the business’. Pick It Pack It Send It ceased trading on 22 October 2020.”
Since the establishment ICSM has consistently warned about the abuse of the £47.4billion Government scheme that was instigated to support business suffering during the Covid-19 shutdowns.
Ian Carrotte said: “The National Audit Office has had a right go at the Department for Business, Energy and Industrial Strategy because the taxpayer would pick up the bill for not only the interest on the loans but act as guarantors if they were defaulted on. It was a disaster waiting to happen as Government ministers like Rishi Sunak and his advisers rushed through the scheme and didn’t listen to industry voices saying this was licence for fraudsters.”
Pick it Pack It Send It Limited owed the loan but also £153,628, including £37,730 to the taxman for VAT plus £76,514 to trade and expense creditors.
“If a member of the public took out a £50,000 loan and did what Pearson did, they’d go to jail,” said Ian Carrotte, “it took the Government until March this year to shut the stable door after the horse had bolted and shut the scheme down.”
Another case in the industry has come to light via Companies House involving a £50,000 Bounce Back Loan is that of PS Office Supplies that was wound up by IP Andrew Turpin in October. The firm crashed owing just shy of a quarter of a million pounds including the £50K Bounce Back Loan. The figures suggest that the firm may have been insolvent when the loan was applied for.
ICSM understands from industry insiders and those left with unpaid invoices by PS Office Supplies that they had concerns over its links to Nectere and one of its directors Paul Musgrove who was also a director of PS Office Supplies.
Ian Carrotte said: “These cases are just the tip of the iceberg. I’ve been banging on about the lack of due process and diligence shown by the Government’s Bounce Back Loans for months. Back in 2020 even the British Business Bank’s Keith Morgan told Alok Sharma the business secretary that the scheme was vulnerable to criminals and fraudsters. And so it’s played out. And it’s legitimate businesses that have picked up the tab.”
About ICSM Credit
ICSM Credit has more than four decades of experience as a credit intelligence group whose members gain inside information about firms in trouble allowing them to avoid bad debts and rogue traders. To join costs less than a tank of fuel – while at the moment there’s a special free temporary membership offer during the Covid-19 crisis which gives access to free legal letters. ICSM also has an effective debt collecting service which has a global reach – ask for details from Paul.
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For details for the work of the journalist Harry Mottram visit www.harrymottram.co.uk