New powers announced to tackle businesses abusing COVID-19 support

New powers announced to tackle businesses abusing COVID-19 support

The Insolvency Service has been granted new powers to investigate and disqualify company directors who abuse the company dissolution process.

The Rating (Coronavirus) and Directors Disqualification (Dissolved Companies) Act will now also help tackle directors dissolving companies to avoid repaying Government backed loans put in place to support businesses during the COVID-19 pandemic.

This includes Bounce Back Loan Scheme (BBLS), Coronavirus Business Interruption Loan Scheme (CBILS) and other support schemes.

If wrongdoing or malpractice is found, directors can face sanctions including a ban of up to 15 years, and potentially criminal prosecution.

The Insolvency Service currently has powers to investigate directors of companies that enter a form of insolvency, including administration and liquidation.

The Insolvency Service can also investigate live companies where there is evidence of wrongdoing and this new Act extends those powers to directors of dissolved companies.

The new powers will be retrospective to allow conduct that took place before the law comes into force to be investigated.

Martin Brooks, Company Secretarial Manager at Rouse Partners comments,

“The COVID-19 schemes have been a vital lifeline to many businesses affected by the pandemic, however not all business owners have acted appropriately in their use of the schemes. This announcement serves as a reminder to directors and companies that the proper use of these schemes is crucial, and that sanctions can be made if malpractice is found.”

Our latest COVID-19 updates

You can see more COVID-19 updates from our team here.

1176 759 Rouse Partners

Rouse Partners

Award-winning chartered accountants offering tax, audit and advisory services. See more

All stories by : Rouse Partners

This information has been produced by Rouse Partners LLP for general interest. No responsibility for loss occasioned to any person acting or refraining from action as a result of this information is accepted by Rouse Partners LLP. In all cases appropriate advice should be sought before making a decision.

Let's stay connected

Sign up to our quarterly e-newsletters, with the latest tax and industry updates from our team.

Still undecided? See our most recent newsletter.

Privacy Preferences

This website uses cookies that help it function and to help us provide an improved user experience.

Necessary cookies: These enable core functionality such as security and accessibility. You may disable these by changing your browser settings, but this may affect how this website functions.

Performance cookies: Below you can change your privacy preferences for performance cookies which help us to review and improve our website experience.

 
We use cookies to help our website function and to improve your experience. Please confirm your preferences and/or agree to our use of cookies.