Tougher action

Directors banned for Covid fraud rises threefold

Fake text messages during covid
Tougher action is being taken the enforcement agency

Insolvency investigators say there has been a sharp increase in the number of directors being banned for fraudulent Covid support claims.

In the nine months to the end of December 312 company directors – 35 per month – were banned from running businesses for abuse of Covid support schemes.

This compares to 141 in the whole year from April 2021 to March 2022 (12 per month).

Over the same period, the average length of director bans has also increased by 22%, from 5.9 years to 7.2 years. Directors disqualified last month received an average eight years ban.

The data suggests that the Insolvency Service is accelerating its enforcement activity in relation to Covid fraud, according to Michael Pallott,  partner and head of contentious insolvency at tax, audit and advisory firm Mazars, which undertook the research.

He said: “The Insolvency Service has stepped up a gear in its pursuit and punishment of those directors responsible for Covid fraud. That’s something that all taxpayers will be pleased to see.

“Without tough action from the Insolvency Service and other enforcement agencies there will be little to deter directors from continuing to abuse the system.

“Directors are far more likely to commit financial misconduct during times of economic stress, when the survival of their business may be at stake.

“However, this does not excuse fraudulent activity, which many directors who bent the rules during the pandemic are now finding out to their cost.”

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