We probably all remember the Eat Out to Help Out scheme whereby the government subsidised food and non-alcoholic drinks at participating cafes, pubs and restaurants during August 2020. Customers received a 50% discount on their order (up to £10 each) on Mondays, Tuesdays and Wednesdays at premises across the UK that had registered with the scheme.
One individual (A) secured almost £50,000 more than he was entitled to from the Eat Out to Help Out Scheme for his limited company (C) in August and September 2020. He had previously abused another Covid support scheme that summer when he obtained a £50,000 Bounce Back Loan for the same restaurant in June 2020. He has now been banned as a director until August 2036 after investigations by the Insolvency Service (IS).
IS analysis of C’s bank statements showed in-house restaurant sales of a maximum of just £8,055 for that month, meaning C claimed at least £48,445 more than it was entitled to. A had also previously secured a £50,000 Bounce Back Loan (BBL) in June 2020, claiming the turnover for the company was £420,000.
Under the BBL scheme companies could apply for a single loan of up to 25% of their turnover from 2019, with a maximum loan limit of £50,000 set under the rules of the scheme. The rules of the BBL scheme allowed businesses to claim up to 25% of their 2019 turnover, with a maximum loan of £50,000. The money had to be used for the economic benefit of the business. Investigations revealed the turnover was closer to £150,000 at most, meaning C was only entitled to a loan of £37,500.
In this case the Secretary of State accepted a disqualification undertaking from A, and his 12 year ban started on Wednesday 7 August 2024. The ban prevents him from being involved in the promotion, formation or management of a company, without the permission of the court. C went into liquidation in June 2021 owing more than £121,000 to creditors.
In a separate case another individual (H) overstated the turnover for two of his businesses to falsely claim a total of £100,000 from the BBL scheme. H claimed the maximum loan of £50,000 each for his businesses, and failed to use the money for the economic support of the businesses. He then became bankrupt in February 2024 and the official receiver (OR), whose role includes investigating the cause of a bankruptcy, discovered that he had overstated the turnover of both businesses to claim more money than each was entitled to under the rules of the scheme.
The OR secured an 11-year Bankruptcy Restrictions Undertaking (BRU) from H, in which he did not dispute that he had obtained a £50,000 BBL for each of his businesses by overstating their levels of turnover and that he had not used the loans for the economic benefit of his trading businesses. This undertaking extends his original bankruptcy restrictions from the standard 12 months until 19 August 2035.