Investigation into bounce back loan fraudsters

New powers given to the Insolvency Service have led to a company director being banned for seven years after being unable to explain what she did with a £45,000 Government loan.

Rupinder Kaur Thaker became a Director of TKML Ltd in April 2016, at the same time the company was incorporated.

According to the Insolvency Service, questions persist around what TKML Ltd did with the money – and whether the business was actually entitled to a loan of that size.

Ms Thaker was unable to produce any evidence that could have provided the liquidator with any reason that could have helped explain the legitimacy of the company’s financial affairs.

Investigators first uncovered a number of inconsistencies in her explanation when asked about the business.

For example, on the company register, the entry for TKML Ltd states the nature of the business as take-away food shops and mobile food stands. However, in a report to creditors, the company was described as providing catering services and décor supplies for wedding ceremonies.

Meanwhile, further enquiries found that between May 2019 and when the company went into insolvency in June 2021, Ms Thaker had failed to preserve and/or maintain adequate accounting records or failed to deliver them to the liquidator. This meant investigators could not verify several substantial transactions.

Proving fraudulent activity is complex and forensic accountants are experts at following the money trail to find out what happened to the cash. In this case, for example, more than £250,000 paid out of TKML’s bank account remains unexplained, as well as there being doubts around the accuracy of debts amounting to £11,000, said by Ms Thaker as being owed to her and a connected business.

Roger Isaacs, Forensic Partner at Milsted Langdon, said: “This may well be the tip of an iceberg and we can expect to see many more people prosecuted or disqualified from being a company director because of misconduct in relation to Covid Bounce Back loans.

However, vast sums that were fraudulently claimed from the public purse are likely to go unrecovered simply because the investigating authorities have so few resources that the can only look into the most obvious and egregious cases.

In some cases, the fraud can be so obvious and blatant that expert accountancy evidence is not even needed.”

Source(s): Gov.UK

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