In the drive to catch bounce back loan fraudsters, bankruptcy restrictions totalling 48 years have been given to five individuals who took £198,894 in Covid-19 financial support
In each of the five cases, the bounce back loans were either wrongfully obtained through overstating their businesses turnover, or on behalf of a company that had already ceased trading prior to the pandemic, or were simply misused for personal use rather than legitimate business spending, the Insolvency Service said.
Charlene Wilson was a self-employed beauty therapist based in Jarrow. She received a £50,000 bounce back loan by overstating her turnover and spent around £15,000 on personal expenses. She has accepted bankruptcy restrictions for eight years.
Georgiana Cercel ran a beauty business from her home in Lincoln while studying full-time. She received a £50,000 bounce back loan by overstating her business turnover, and gave £10,000 to her sister. She is subject to bankruptcy restrictions for 10 years.
Florin Bodale worked as a building contractor through his company Varga Construction. He obtained a £50,000 bounce back loan by overstating his turnover, although he told investigators he believed he had been asked for total turnover for the previous three years. However, this amount would still have been less than half the turnover he stated. He has accepted a 10-year bankruptcy restrictions undertaking.
Sarah Sweeting ran a farm shop home delivery service from October 2020. She obtained a £22,000 bounce back loan despite not being eligible as businesses had to have been trading prior to March 2020. Of the £22,000, she transferred around £14,000 to her husband. She has accepted a 10-year bankruptcy restrictions undertaking.
Abbas Moradmand ran a tyre business from 2018 to 2019 then worked as a taxi driver. After a short closure the business re-opened and continued to trade under new ownership. However, Moradmand secured a bounce back loan of £26,894 to which he was not entitled as it was based on an application on behalf of his former tyre business. He has accepted a 10-year bankruptcy restrictions undertaking.
Their bankruptcy restrictions mean none of the individuals are able to borrow more than £500 without disclosing their bankrupt status. They also cannot act as a company director without permission from the court.
In each of the above cases the local official receiver is working on potential recovery action.
Kevin Read, official receiver at the Insolvency Service, said: ‘In all of these cases it was obvious, or it should have been obvious, that they either misused the bounce back loan for personal benefit, took a larger loan than they were eligible for, or weren’t eligible for a bounce back loan at all.
‘This is taxpayers’ money they have abused and we will not hesitate to impose bankruptcy restrictions in these circumstances.’
Three people were arrested after HM Revenue and Customs (HMRC) officers visited businesses across the country in a day of action after new powers were introduced in the fight against till fraud
Businesses involved in making, supplying or promoting electronic sales suppression (ESS) systems that help users hide or reduce the value of till sales, now face fines of up to £50,000 and criminal investigations. Users also face fines as HMRC increases efforts to target the tax evasion practice.
HMRC investigations visited 30 businesses on 18 May including shops, takeaways and restaurants, across nine counties to tackle ESS and two men and a woman were arrested in Nottinghamshire as part of a criminal investigation into the alleged supply of ESS software.
The men, aged 43 and 58, were arrested along with a 56-year-old woman on suspicion of fraud offences and cheating the revenue.
A search warrant was executed by HMRC officers at three addresses and computers, digital devices and paperwork were seized. All three suspects have been released under investigation.
Financial Secretary to the Treasury, Lucy Frazer, said the overwhelming majority of businesses are paying their taxes and rightly want to see HMRC stepping in where needed to ensure a level playing field for all.
“Tax crime does not stand still and neither do we – the new powers available to HMRC allow them to clamp down on ESS and help recover tax revenues to fund our vital public services,” she said.
Marc Gill, HMRC’s director of individuals & small-business compliance, said electronic sales suppression gives the appearance a business is trading legitimately, when in fact they’re really just stealing money from taxpayers.
“We encourage anyone using, supplying, making or promoting ESS to report via our disclosure facility. Making a disclosure is not only the right thing to do it could also lead to a reduction in financial penalties,” he said.
ESS users will either have access to specialist software or will configure their electronic point of sale (EPOS) device in a specific way that allows them to consciously hide true sales and the resulting tax that is due.
Sales processed through the till give the impression they have been recorded as normal, however the end-of-day report is deliberately manipulated behind the scenes to reduce reported takings.
As part of investigations into ESS HMRC can also recover tax evaded and launch investigations that could result in criminal convictions.
HMRC has a voluntary disclosure facility and would encourage anyone using, making, supplying or promoting ESS to contact them. By making a disclosure now those using or benefiting from ESS could see their financial penalties reduced.
HMRC is warning university students to be wary of potential scams, especially if they have a part-time job and are new to interacting with the tax office
University students taking part-time jobs are at increased risk of falling victim to scams, HMRC said.
By June this year, more than 680,000 students had applied to university, and over 900,000 held part-time jobs during the 2020 to 2021 academic year.
Higher numbers of students going to university this year means more young people may choose to take on part-time work. Being new to interacting with HMRC and unfamiliar with genuine contact from the department could make them vulnerable to scams.
In the past year almost one million people reported scams to HMRC.
Nearly half of all tax scams offer fake tax refunds, which HMRC does not offer by SMS or email. The criminals involved are usually trying to steal money or personal information to sell on to others. HMRC is a familiar brand, which scammers abuse to add credibility to their scams.
Links or files in emails or texts can also download dangerous software onto a computer or phone. This can then gather personal data or lock the recipient’s machine until they pay a ransom.
In the two-month period April to May this year, 18 to 24-year olds reported more than 5,000 phone scams to HMRC.
Mike Fell, head of cyber security operations at HMRC, said: ‘Most students won’t have paid tax before, and so could easily be duped by scam texts, emails or calls either offering a ‘refund’ or demanding unpaid tax.
‘Students, who will have had little or no interaction with the tax system might be tricked into clicking on links in such emails or texts.
‘Our advice is to be wary if you are contacted out of the blue by someone asking for money or personal information. We see high numbers of fraudsters contacting people claiming to be from HMRC. If in doubt, our advice is do not reply directly to anything suspicious, but contact HMRC through gov.uk straight away and search gov.uk for ‘HMRC scams’.’
In the last year (September 2020 to August 2021) HMRC has:
- responded to 998,485 referrals of suspicious contact from the public. Nearly 440,730 of these offered bogus tax rebates;
- worked with the telecoms industry and Ofcom to remove 2,020 phone numbers being used to commit HMRC-related phone scams;
- responded to 413,527 reports of phone scams in total, an increase of 92% on the previous year. In April last year we received reports of only 425 phone scams. In August 2021 this had risen to 3,269;
- reported 12,705 malicious web pages for takedown;
- detected 463 Covid-19 related financial scams since March 2020, most by text message; and
- asked internet service providers to take down 443 Covid-19 related scam web pages.