These fifty grand loans

[akirk]

M1AGM said:

I agree, it is the most basic of frauds done by idiots, there will undoubtedly be more sophisticated fraudsters out there. I think the banks are the ones who have flagged these up with the Insolvency Service to investigate, but I could be wrong. The IS wouldn't know about the loans if they were not declared on the application.

This popped into my inbox this morning:

https://www.blmforum.net/mag/insolvency-service-ba...

"The Insolvency Service is now banning an average of 35 directors a month for Covid Support Scheme abuse, almost three times the 12 per month banned in the previous year, according to new data from international tax, audit, and advisory firm Mazars."

I thought there was a government anti-fraud group (HMRC?) who are doing the investigating - the government will have all the info on applications - they also have a list of insolvencies - would take about 5 minutes to load up both lists / write a query / match and then sort by date gap between loan application and insolvency - easy pickings

[MattsCar]

I heard something in the media the other day that HMRC are no longer pursuing these BBL frauds as the investigators time can be spent more productively chasing other lines of inquiry.

Will see if I can find a link and add it.

[JCKST1]

What happens if people genuinely cant repay it?

Lets say you took the loan in good faith but the economy has turned things on its head, you dont own stock and minimal assets but have made payments on time for X amount of months/years. Does it just get wrote off and you walk away clean knowing you have done what you can, could HMRC actually go after you providing you can show a company has dwindled to a stop?

I fully agree with the other cases where people have took 50k and then closed their company immediately but I hope genuine people dont get caught up in the mess.

I knew from the start this would end up being a complete balls up and it just continues. £50k was excessive from the start and when you dangle that infront of people what do they expect.

[M1AGM]

JCKST1 said:

What happens if people genuinely cant repay it?

Lets say you took the loan in good faith but the economy has turned things on its head, you dont own stock and minimal assets but have made payments on time for X amount of months/years. Does it just get wrote off and you walk away clean knowing you have done what you can, could HMRC actually go after you providing you can show a company has dwindled to a stop?

I fully agree with the other cases where people have took 50k and then closed their company immediately but I hope genuine people dont get caught up in the mess.

I knew from the start this would end up being a complete balls up and it just continues. £50k was excessive from the start and when you dangle that infront of people what do they expect.

The people getting caught have broken insolvency rules and are therefore up for being prosecuted. Genuine cases where trading has deteriorated wont be in that group. Iirc there were no directors guarantees required for the loans so the debt would stay with the business/administration.

[48k]

JCKST1 said:

I knew from the start this would end up being a complete balls up and it just continues. £50k was excessive from the start and when you dangle that infront of people what do they expect.

That 50k made the difference between me being able to keep my head above water, and not. In the end I didn't need all of it, but it was a lifeline. YMMV

[JCKST1]

48k said:

That 50k made the difference between me being able to keep my head above water, and not. In the end I didn't need all of it, but it was a lifeline. YMMV

Thats fair enough and I am sure a lot of people benefitted from it but I still think the vast majority probably didn't need that much (or perhaps any of it) but took it cause it was there. Cant blame most people but they were just asking people to take the p*ss really and I know a lot of people who did.

[classicaholic]

It all happened very quickly (as it needed to) and a lot of checks were overlooked, if there was 10% fraud and the rest gets paid back or merged into general lending then it works, I suspect it kept quite a lot of companies going so it was worth it.

[Terminator X]

JCKST1 said:

48k said:

That 50k made the difference between me being able to keep my head above water, and not. In the end I didn't need all of it, but it was a lifeline. YMMV

Thats fair enough and I am sure a lot of people benefitted from it but I still think the vast majority probably didn't need that much (or perhaps any of it) but took it cause it was there. Cant blame most people but they were just asking people to take the p*ss really and I know a lot of people who did.

I took it just in case I needed it^ and I'm paying it back every month as the T's and C's. I would say that the very vast majority are like that vs a few fraudsters.

^no one knew how Covid would pan out right at the start remember

TX.

[sleepezy]

MattsCar said:

I heard something in the media the other day that HMRC are no longer pursuing these BBL frauds as the investigators time can be spent more productively chasing other lines of inquiry.

Will see if I can find a link and add it.

Cases are still going through https://www.gov.uk/government/news/10-year-ban-for... (there's obviously a lag between identification, decision, action and reporting) - I wonder whether HMRC have identified the suspicious applications and are now just plugging through the cases?

[jammy-git]

JCKST1 said:

48k said:

That 50k made the difference between me being able to keep my head above water, and not. In the end I didn't need all of it, but it was a lifeline. YMMV

Thats fair enough and I am sure a lot of people benefitted from it but I still think the vast majority probably didn't need that much (or perhaps any of it) but took it cause it was there. Cant blame most people but they were just asking people to take the p*ss really and I know a lot of people who did.

It was supposed to be proportional to the business turnover - 25% of your last years turnover to be precise. I don't think that's excessive given that a lot of business were completely without revenue for several months.

Don't forget certain sectors of society were given money for free, no obligation to pay it back. Business owners were given nothing, and businesses themselves were given debt.

[akirk]

JCKST1 said:

48k said:

That 50k made the difference between me being able to keep my head above water, and not. In the end I didn't need all of it, but it was a lifeline. YMMV

Thats fair enough and I am sure a lot of people benefitted from it but I still think the vast majority probably didn't need that much (or perhaps any of it) but took it cause it was there. Cant blame most people but they were just asking people to take the p*ss really and I know a lot of people who did.

If they didn't need it - why did they take it?
either they were deliberately looking to defraud the government, or they had a business need - I am sure a few took it as insurance, but then paid it back before the interest bearing period - otherwise, even though low interest there is still interest on it, it is still debt, it is still a cost to the business, so outside fraud I don't understand why it was taken unless needed, it wasn't free...

[Louis Balfour]

akirk said:

JCKST1 said:

48k said:

That 50k made the difference between me being able to keep my head above water, and not. In the end I didn't need all of it, but it was a lifeline. YMMV

Thats fair enough and I am sure a lot of people benefitted from it but I still think the vast majority probably didn't need that much (or perhaps any of it) but took it cause it was there. Cant blame most people but they were just asking people to take the p*ss really and I know a lot of people who did.

If they didn't need it - why did they take it?
either they were deliberately looking to defraud the government, or they had a business need - I am sure a few took it as insurance, but then paid it back before the interest bearing period - otherwise, even though low interest there is still interest on it, it is still debt, it is still a cost to the business, so outside fraud I don't understand why it was taken unless needed, it wasn't free...

Because at the time no one knew how bad things would become and there was a limited window of opportunity to accept the loans. They were also cheaper than other debt and repayable at any time.

I am pretty sure that the firms who took the loans “just in case” vastly outnumbered those who took them with fraudulent intent.

[skwdenyer]

akirk said:

If they didn't need it - why did they take it?
either they were deliberately looking to defraud the government, or they had a business need - I am sure a few took it as insurance, but then paid it back before the interest bearing period - otherwise, even though low interest there is still interest on it, it is still debt, it is still a cost to the business, so outside fraud I don't understand why it was taken unless needed, it wasn't free...

It was really cheap, unsecured working capital. As an insurance policy, I can't imagine why many businesses wouldn't have taken it. Opportunity cost is also a cost to the business. Insurance has a premium cost. Etc. Interest-free for 1 year, then 2.5% thereafter (so basically zero in real terms, even before the inflation spike) is incredibly-cheap working capital in a UK context.

"Didn't need it" and "looking to defraud the government" are two entirely-unrelated concepts. Business need wasn't one of the criteria: not needing it at that moment didn't make the application invalid or fraudulent.

[akirk]

both of those are logical responses - and arguably not an issue as using it as working capital to grow a business helps push the economy the way the government wanted - so still a success, but the implication above was that people who took it, unless they could prove they absolutely needed it, were somehow being dodgy - might point was that unless you could use it (rescue your business / help to grow the business) you would not have kept it beyond the insurance period because while it might be cheap, it still costs more than not having the loan if all it does is sit in the bank!

[sleepezy]

As someone who runs their own business but decided there was no need to take the £50k, I have no problem with anyone who did take it as a safety net and subsequently repaid (or is repaying). I think that's a sensible approach. Some businesses would still have failed - and so long as the funds were used as intended, that's life and the loans were doing the job intended.

I believe the vast majority of loans fall into these categories. And agree, when they were started we really didn't have any idea of what was going to happen.

I do have a big problem with those who took it and ran and wish there was a harsher action taken against these rather than a slap on a wrist disqual and acceptance of a sob story about how the money can't be repaid. There does seem to be a mindset (not necessarily on here) of criticising the government for making it too easy, rather than focussing on the people who fraudulently took the cash - if no-one had committed a fraud then virtually all the money would be repaid and the government would look likes heroes (maybe that's a step too far...)

[22]

I took £50k for one company - paid it back last year (and never dipped into it).

Also took another £8k for a little personal service company and am paying it off still. Don't even remember where the money went

I imagine much of the fraud was in new and previously dormant companies who borrowed based on projections they never planned to attempt.

[JCKST1]

Like I said, I am not saying everyone was taking the p*ss with them but everyone I talk to knows at least one person who has done something they shouldn't have with it.

I know of a few people, mainly contractor type guys/company set up's who took the money, for all I know they maybe paying it back as normal or not but one spent his £20k towards an Audi R8 and two others now have nice Rolex's.

I think the offer of immediate cash and low interest peaked people interest and they took it. What they do with it is up to them, not my worry.....

[akirk]

JCKST1 said:

Like I said, I am not saying everyone was taking the p*ss with them but everyone I talk to knows at least one person who has done something they shouldn't have with it.

I know of a few people, mainly contractor type guys/company set up's who took the money, for all I know they maybe paying it back as normal or not but one spent his £20k towards an Audi R8 and two others now have nice Rolex's.

I think the offer of immediate cash and low interest peaked people interest and they took it. What they do with it is up to them, not my worry.....

we must know different people, I know some who took it to support their business, I know a couple who took it as insurance due to uncertainties for the future, but then paid it back as a complete payment before interest cut in - I don't know anyone who has bought a watch or car with it. Presumably they will pay it back with (admittedly low) interest - but if they can justify doing that, then presumably the business will support it - there might be more interesting questions regarding tax than the loan...

[sleepezy]

JCK - none of my comment was aimed at you or anyone else on here - just setting out my own views in a discussion and apologies if you thought my comments were specific to anything you'd said

I too know:
Companies, including PSCs, that borrowed but repaid in a bullet ASAP
Companies that borrowed and used the funds to genuinely prop up a business and are now repaying
-no issue with either of these two

I also know a small number of PSCs that had taken the loans and suddenly the shareholder/directors gained expensive toys - all the ones I know who did this are repaying the loans - I question their moral compass somewhat, and know it has damaged their reputation with introducers not least as none of them managed to keep their traps shut about it and uniformly boasted about what they'd done, but at least the funds are being repaid.

Oddly, given my line of work, I don't know any company who took the loan for genuine purposes but subsequently failed, or took the loan and legged it with or without something new and shiny. I am aware that I have rather less than 100% market knowledge though. I guess that's because professionally I deal with larger businesses and then we're talking CBILS/CLBILS - the £50ks I know of pretty much all relate to competitor PSCs, "blokes down the pub" and my neighbour.

[classicaholic]

One of my customers took it and paid for a machine we built for them, they were quoted 10% by the leasing company but had this for 2.5% - no brainer really if you needed to borrow.