Lengthy bans for directors who fiddled Covid scheme

AN AVERAGE of 35 directors are being banned by the UK Insolvency Service each month for abusing the Covid Support Scheme.

That’s almost treble the 12 banned per month in the previous year, according to data from tax, audit and advisory firm Mazars.

Businessman in handcuffs. Covid scheme fraud illustrationIn the nine months of the 2022/23 year to date, 312 British company directors have been banned from running businesses because of abuse of Covid support schemes.

The average length of director bans has increased by 22 percent, from 5.9 years to 7.2 years. Directors disqualified — prevented from taking the role of a director — in December 2022 received bans averaging eight years.

The increase in disqualifications and longer bans suggests that the Insolvency Service is accelerating its enforcement activity in Covid fraud.

Head of Contentious Insolvency at Mazars, Michael Pallott, says the service has stepped up its pursuit and punishment strategy. “That’s something that all taxpayers will be pleased to see,” he says. “Without tough action from the Insolvency Service and other enforcement agencies, there will be little to deter directors from continuing to abuse the system.”

Harsher penalties suggest that the Insolvency Service is sending the message that dire straits do not excuse fraudulent activity “which many directors are now finding out to their cost”.

Directors who are concerned that they may have broken any rules are advised to come forward, says Pallott.