Two businesses that never traded but fraudulently obtained Covid-19 support loans worth thousands of pounds have been wound up by the courts.
The firms, LV Distributions and SIO Traders, which are unrelated, submitted false documents to some 41 local authorities and the Government’s Bounce Back Loan scheme to obtain £230,000. They fraudulently claimed they traded out of premises in their respective areas.
The businesses were wound-up in the High Court in separate hearings on 27 July, after enquiries were conducted by the Insolvency Service – this found neither company ever traded.
Insolvency Service investigators found that SIO Tradershad registered its offices in Whitchurch, Shropshire, but provided false lease documents and utility bills to 14 different local authorities. SIO Traders claimed they supplied PPE and secured £95,000 worth of business grants from 10 local authorities. The firm also secured a £50,000 Bounce Back Loan they were not entitled to.
LV Distributions registered its offices in Redhill, Surrey, and said it sold medical care products.
Decisive Enforcement Action
Within a 10-day period, between 17 and 27 August 2020, LV Distributions provided false lease documents and utility bills to 27 local authorities. The company fraudulently secured £35,000 in business grants from two local authorities, as well as a £50,000 Bounce Back Loan. It was found that the premises which LV Distributions claimed to operate from were either unoccupied, up for rent or occupied by another company.
Small business minister Paul Scully said: “This decisive enforcement action shows we will not tolerate shameless attempts to defraud the taxpayer and falsely claim public money intended to help businesses through the pandemic.
“We are cracking down on COVID fraud across the board and those who have tried to take support they were not entitled to, which was given in response to the worst crisis of our lifetimes, can expect to face heavy consequences.”
More powers for Insolvency Service
The Insolvency Service is expected to gain extra powers to investigate Bounce Back Loan fraud in cases where the company has been dissolved. The Ratings (Coronavirus) and Directors Disqualification (Dissolved Companies) Bill, currently before Parliament and if passed, will give the Insolvency Service powers to investigate, and if appropriate take action to disqualify directors of companies that have fraudulently claimed Bounce Back Loans but which have since been dissolved.
The law will be retrospective to allow conduct that took place before the law comes into force to be investigated.