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COVID-19 And The Impending Surge in Director Bans

For misusing government pandemic support ...


Posted by Helen Beaumont on 25/10/2023 @ 8:00AM

The COVID-19 pandemic, while primarily a health crisis, spiralled into an economic challenge of unparalleled magnitude. To counteract the economic downturn, the UK government introduced a slew of financial support schemes ...

The next few months will see a significant escalation in director disqualifications!

The next few months will see a significant escalation in director disqualifications!

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However, the unintended consequence of these well-intentioned measures is now coming to the fore with a marked increase in director disqualifications. Historically, between 2011 and 2021, the UK saw an average of 1,238 director disqualifications per annum.

"Yet, these figures took a downturn during the pandemic years!"

This decline can be attributed to the government's financial interventions in the form of various support schemes, which, while designed to mitigate the economic repercussions of the pandemic, inadvertently provided a lifeline to many businesses already on the brink of collapse.

Recent statistics are cause for concern. As of September 2023, there's been a 17% year-on-year increase in registered company insolvencies. This uptick is indicative of businesses, once propped up by governmental aid, now grappling with the stark realities of a post-pandemic economy. Historically, a surge in company insolvencies has been a precursor to a rise in director disqualifications.

A significant catalyst for the anticipated spike in disqualifications is the misuse and fraudulent claims associated with the Bounce Back Loan (BBL) scheme!

Preliminary estimates suggest that the BBL scheme might have been exploited to the tune of £1.1 billion. In response, HMRC is making a concerted effort to bring the culprits to book. The period between 2022 and 2023 alone saw over 450 directors facing bans for misappropriating COVID-19 financial aids, constituting nearly half of all disqualifications during that timeframe.

The trajectory is indeed worrisome. In the previous financial year, an average of 38 directors were banned monthly for misusing pandemic-related financial schemes. However, data from the Insolvency Service reveals a sharp increase, with this figure rising to 58 monthly bans between April and July 2023.

Flagrant cases of BBL fraud have garnered media attention, but there's a subtler issue lurking in the shadows: the nuanced distinction between fraud and misuse. It's imperative for directors to exercise caution in their utilisation of these funds, as inadvertent misuse might be construed as fraud by lending institutions.

"I believe the next few months will see a significant escalation in director disqualifications!

The government's resolve to recoup losses and penalise those who took undue advantage of its emergency provisions is evident. This unfolding scenario underscores the paramount importance of ethical business conduct.

It serves as a stark reminder of the repercussions of deviating from it.

Until next time ...



Would you like to know more?

If anything I've written in this blog post resonates with you and you'd like to discover more about director bans and what it could mean for you and your business, it may be a great idea to give me a call on 01908 774323 and let's see how I can help you.

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About Helen Beaumont ...


Helen brings the personal tax planning experience of the top 20 tax companies to Essendon. Formerly of MacIntyre Hudson (with 45 offices nationwide), Helen worked at Chancery for more than 10 years before joining Essendon as the personal tax specialist.

Tax Planning can make a considerable difference to your tax liability. Helen has specialist knowledge and experience in tax planning and uses every opportunity to minimise your tax bill is utilised. By analysing your investments, income, profit and expenditures, Helen will provide strategic tax planning expertise that could offer significant savings, whilst delivering clear, honest advice and guidance.

When Helen is not at Essendon she spends time with her young son and likes going on long walks with the family dog.