Accountants were recently reminded of their duty to report suspected misuse of the Bounce Back Loan Scheme (BBLS), meaning more individuals could be accused of false accounting in order to receive the loan and keep their business afloat. False accounting is a very serious crime and those convicted of the offence could receive a custodial sentence. They also risk losing their business and having their reputation forever tarnished.
In this article, we look at false accounting during the Covid-19 pandemic, and what you should do if you are concerned about this particular fraud offence in your business. Please get in touch with our dedicated team today.
What is false accounting and how is it committed?
False accounting is a type of fraud which occurs when the assets or liabilities of a company are overstated or understated in order to make a company’s finances appear different. For example, an employee, director or other person may deliberately destroy or tamper with the business accounts so that they do not show the true financial state of the business.
The eligibility criteria for Covid-support grants and loans
False accounting was widespread during the Covid-19 pandemic, due to the strict eligibility criteria for receiving support grants and loans from the government. For example, to be eligible for the BBLS, a business must have been adversely impacted by coronavirus restrictions. It is likely that many struggling business owners found the scheme unfair as only some businesses were eligible for assistance, even though the majority still felt the pinch of the pandemic.
Altering accounts to make a business appear eligible for Covid support is therefore thought to have been common, but now the government is taking serious steps to clawback lost funds.
What constitutes misuse of the Bounce Back Loan Scheme (BBLS)?
The BBLS allowed businesses to borrow between £2,000 and £50,000 - up to 25% of their turnover. However, the checks on the scheme eligibility were light and this made the application process more open to fraud, particularly false accounting.
There are several offences that have been tied to BBLS fraud and these include:
- False accounting
- Fraud by false representation (Fraud Act 2006)
- Conspiracy to defraud
- Money laundering
The government is now investing a significant amount of resources into investigating Covid-support fraud which could lead to many businesses who have misused the BBLS suffering severe consequences.
What to do if you believe false accounting has occurred in your business
If there is any doubt or suspicion around applications made to the loan scheme by your business, it is important that you take the proper steps to investigate this immediately. There have been genuine concerns that criminals may have been able to infiltrate a legitimate business and subsequently engineer fraudulent applications that business directors are unaware of. If you uncover potential false accounting or other types of fraud, company directors should instruct the legal expertise of a criminal fraud lawyer right away.
Defending allegations of false accounting
Investigations into false accounting can be complex. The investigating agency will be very thorough and any anomalies will be examined in detail. We can liaise with any agencies that may be involved in a fraud investigation and help you to navigate this challenging process.
False accounting can easily spiral into a huge deception and, as such, you must be prepared to defend your business, even against what may seem like a minor action. The earlier you instruct specialist legal guidance, the less opportunity for missteps and the better chance you have for a successful outcome.
Allegations of false accounting require robust defense based on intricate analysis. Only specialist legal representation can provide you with the highest level of advice and assistance at this time. It is not only building a defence which is important in false accounting cases, but mitigating sentencing.
Aggravating and mitigating factors
There are both aggravating and mitigating factors included in the sentencing guideline which can have a huge impact on the sanctions a person convicted of false accounting will receive. The reasoning behind the deception can play a part in the sentence given, for example whether it's motivated by illness, money concerns, family problems or to lead a luxury lifestyle. To ensure the best possible outcome, it is always recommended to instruct a team of experienced solicitors to assist you.
Contact our Financial Crime Solicitors in Central London Today
If your business is contacted by HMRC regarding false accounting, it is imperative to get expert legal advice immediately and get further assistance. If you require help and advice with fraud investigations related to furlough fraud or BBLS, please get in touch today. Call us on 020 7387 2032 or fill in our online enquiry form.
