Inflated turnover figures in bbl?

gunner786

For those people who have entered inflated figures in the bounce back loan turnover section to get a bigger loan will there be any checks and any comebacks from the authorities?

[Deleted User]

It depends on a range of factors, first would be how out the figures are, a few hundred or lower, probably not, thousands or more then probably. 

For limited companies check are relatively easy as they submit annual accounts as well as bank accounts. For sole traders then turnover can also be compared to bank statements, one of the reasons why the banks have been so wary of people who have been using personal bank accounts for business purposes.

Sole traders are already personally liable for the debt, limited company directors would almost certainly be if they had committed fraud to gain the loan. 

Penalties on top of that could range from fines and CIFAS markets for straight cases of figures being inflated, through to jail for fraud when people have used fake startups, multiple names etc. to gain more than one loan.

Anyone doing so would be absolutely idiotic, there is going to be a huge increase in financial scrutiny in the coming years, anyone who has done so will probably be found out by the banks. The government is already investigating CJRS and SEISS fraud, it is highly likely BBLS will be next.

Jeremy535897

gunner786 said:

For those people who have entered inflated figures in the bounce back loan turnover section to get a bigger loan will there be any checks and any comebacks from the authorities?

If the loan is paid off when expected, I doubt it. The government will only become involved if the guarantee is called in. The issue should therefore only arise if the loan goes bad. The loan conditions include the statements that there is no recourse to the personal assets of company directors, and no recourse to the main residence or primary vehicle of an individual borrower. Whether these protections would survive an allegation that, for example, turnover was deliberately and provably overstated, is not clear. That provability is not helped by using calendar year figures when sole traders often do accounts to March, or the fact that projected turnover could be used for businesses that were set up recently.

Grumpy_chap

Inflating the figures amounts to fraud.

The loan is allowed up to 25% of 2019 turnover.  2019 turnover is a known fact, so there is no excuse for any business to get that incorrect.

The exception is new start-up business, where a projected turnover can be used.  This projected turnover should still be based on sound basis, either the initial months trading before lockdown or a previously developed and realistic business plan.  It is likely that there will be a record of the business plan outside the business, for example shared when applying for business bank account, insurances, or even shared with a trusted friend ahead of starting to test the proposal.

If the amount of the "excess loan" was notional (e.g. rounding) and it is paid back correctly, I agree with Jeremy it is unlikely to be picked up.  Beyond that I think the applicant should expect serious penalties to follow.  Even a notional rounding excess is lacking in sense as it gives a small increase in funds available for disproportionate risk to the applicant - no viable business will be saved by a very small amount of extra loan.

jfinnie

Even if the loan doesn't go bad, it is effectively defrauding the state of 2.5% of the difference between what they should have maxed out their application at and what they took (as that money will be paid to the bank by the Govt on your behalf).  This is money the rules said you weren't entitled to.

I'm not so sure they won't be looking into this even for good loans.  A recent press piece seemed to imply they may even be going after folk applying for loans that failed the "impacted by Coronavirus" test, which of course is a similar fraud of at least the 2.5% paid to the bank.  However it seems that it might be more difficult to make that stick as it was very poorly defined to start with - though there are now some examples relating to SEISS on the Govt webiste.  HMRC do have a history of re-interpreting stuff retrospectively (Loan charge anyone?) so I wouldn't like to bet on it.