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I took a bounceback loan for my company for 25k and have been repaying fine.  But I have had a letter from Santander asking me questions. I took 25 in good faith on the basis of invoices issued in the preceding 12 months which totalled 102k; but much of these were not then paid as the person died. Completely genuine intent, but did not turn out that way but am meeting repayments. Presumably, when I say the above to the bank they will say I've committed fraud and will want all  money back straightaway? From me personally? Help please!

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By Justin Bryant
25th May 2022 15:45

You basically have nothing to worry about is the very short answer (or if you do, you will be at the end of a phenomenally long queue).

Someone called Basil (AKA merchant of doom) may be along soon and say different.

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Replying to Justin Bryant:
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By Paul Crowley
25th May 2022 15:45

+1
A queue that will never be cleared

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By Paul Crowley
25th May 2022 15:43

I see no problem provided that the invoices were genuine.
My guess is that bank is confusing the income you declared with money received in the same timeframe
The isssue to address really is whether your company was insolvent at the time you applied for the loan

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By Leywood
25th May 2022 15:46

Presumably you are sorting this out with the deceased’s estate reps.

Legal Q not Accountancy one.

If honest, nothing to worry about surely.

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By Tax is always taxing
25th May 2022 15:52

I'd answer the questions honestly and then forget about it.

Although if the person died from covid that would be an extra tick for adversely affected.

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Replying to Tax is always taxing:
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By Hugo Fair
25th May 2022 17:18

There's a fine line between black humour and crassly insensitive ... so well done for demonstrating it.

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Replying to Hugo Fair:
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By Tax is always taxing
26th May 2022 11:46

There is also a fine line between a numerator and a denominator, but only a fraction of people will get this.

Better Hugo? (Although, if you think the first one was dark I worry for you)

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Replying to Tax is always taxing:
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By Hugo Fair
26th May 2022 12:44

Certainly better ... and I liked it!

FWIW the darkness wasn't of my perception, but then I haven't lost a friend, lover or partner to Covid ... so no need to worry yourself on my behalf!
Portraying such an event as beneficial (even in the context of being part of the excuse that justifies a BBL) is distinctly macabre ... albeit funny, which is why I applauded your demonstration of that proverbial demarcation.

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Replying to Hugo Fair:
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By ak1964
26th May 2022 12:43

He left a wife and young children so perhaps not that funny.

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Replying to Hugo Fair:
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By Tax is always taxing
26th May 2022 16:02

Indeed, jokes can be divisive, no offence was intended.

But i'm glad to hear both your partner and your lover are doing well.

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By fawltybasil2575
25th May 2022 17:16

@ ak1964 (OP).

You say:-

“Presumably, when I say the above to the bank they will say I've committed fraud and will want all money back straightaway? From me personally?”.

As hopefully a reasonable judge of character, I am compelled to say that, at the risk of perceived obsequiousness, you sound a most genuine person. On that basis, I accord entirely with the views of the previous posters in believing that you have no reason to hold any of the fears which you express.

Santander have probably simply ascertained a matter (frankly, very probably a “computer-driven” ascertainment) which has prompted the “stock enquiry letter” sent to you and no doubt to countless others [in their reasonable exercise in trying to trace disingenuous (and worse) BBL loan applications].

Conceivably, purely hazarding a guess at why your case may have been selected during that Santander process, if the non-payment of the invoices to which you refer has resulted in little (or no) monies being credited to your company’s bank account recently, Santander’s system may have unearthed a comparison between (i) the “turnover” which the recent bank account credits suggests, and (ii) the turnover figure which you will have declared on your BBL application – I reaffirm that this is no more than one of possible theories.

I have every reason to believe that you will be able to explain matters to Santander, to their satisfaction. Feel free of course to advise us of the nature of the questions from Santander.

Basil.

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By Winnie Wiggleroom
25th May 2022 18:06

Surely it all depends on what questions they are asking you - care to enlighten?

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Replying to Winnie Wiggleroom:
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By DKB-Sheffield
25th May 2022 20:04

I'm with Winnie on this.

@OP you've asked for, and received some advice on this (from what I deem to be reputable sources).

It would, however, be good to know what you are being asked (no specific 'confidential' details- obviously) as that will enrich this thread (for future). It may also forearm/ forewarn those who have answered enabling preparation for future.

Conversely, you may receive conflicting advice if the substance of Santander's questioning is materially at odds to the synopsis provided in your OP.

I am with others that, on the face of it, and based on the information thus far provided, this may be nothing more than a 'stock letter'. It would further seem likely that (in my opinion *only*) you have sufficient evidence to support your application (which is 100% more than many BBL applicants!). However, as the exact nature of Santander's enquiry is unknown, any encouragement you may feel you have received could be futile if the letter is along the lines of a formal investigation.

EDIT: Incidentally... on the question of whether the loan can be collected from you personally... personal guarantees were not required (or allowed) under BBLS. That is of course assuming repayment cannot be claimed via other means (e.g. overdrawn director's loan account in liquidation).

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By ak1964
26th May 2022 09:30

Thank you all.

The letter I have received is a standard one that Santander use with the blanks being filled in for specific customers. It comes from Head of Fraud etc and is scary! I think these have been being sent out for apx 18 months maybe.

This is what I received:

https://mrbounceback.com/santander-post-bbl-drawdown-checks-causing-adde...

The two paragraphs of most relevance are that the turnover declared and the money that went through the a/c are not the same. I worked on an accrual basis and gave accurate figures at the time of application then, as the man receiving the invoices died and they were not paid, I amended tax returns to a cash basis. I can show invoices, proof that he died etc but technically, I did not have the t/o I stated, in all honesty, so what Santander will do I don't know.

The second is that the company, using the BBL, paid me, an individual, to produce reports for them and I can show reports and that they were of economic benefit to the company. So they may push me on that but that's 100% okay (I think ...)

Thank you

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Replying to ak1964:
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By Justin Bryant
26th May 2022 09:44

Interesting link. Possibly this is prompted by Government pressure on these lenders to actually do some "stable door" checks, even though numerous horses has long since bolted so to speak.

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Replying to ak1964:
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By Jdopus
26th May 2022 10:36

Remind yourself that none of us are expected to be fortune tellers. If at the time you prepared the accounts, you expected to be paid for those invoices then you have nothing to be concerned about here. You reported your turnover honestly and did nothing wrong.

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Replying to ak1964:
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By Leywood
26th May 2022 11:50

You moved the company to cash basis?! Oh dear. A big error.

Then worked for own company as self employed to produce 'reports'.

Now its starting to sound a bit off.

You need an Accountant to sort out your mess.

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Replying to Leywood:
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By Hugo Fair
26th May 2022 12:22

The bit I don't understand is OP says "have been repaying fine" ... so haven't the bank got better fish to fry (the ones that aren't repaying but need to be 'chased' in order to validate a claim by the bank for repayment by the Govt)?

But I agree that the latest revelations (particularly the bit about 'reports') would amplify the klaxons not switch them off.

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By ak1964
26th May 2022 12:32

Okay, thanks for latest feedback. I don't think I am off but muddled yes.

To clarify, I have always produced a/cs based on invoices issued as I have not had any real issues with payments being late. On this occasion, I produced accounts in the same way. The man I was invoicing then died suddenly and most went unpaid. So for HMRC, instead of filing accounts based on invoices and then paying tax on those, even having not had payment, I submitted a/cs for what I had received. Should I have filed and paid tax and then claimed back the next year?

I have worked for my company on a consultancy basis, producing reports for the company to sell which it has done very well. Is that not allowed?

And yes, happy to employ an accountant if anyone can recommend one?

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Replying to ak1964:
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By Leywood
26th May 2022 12:40

Cash basis is not allowed for companies. Simple as.

For an Accountant, look here
https://www.icaew.com/about-icaew/find-a-chartered-accountant

or here
https://www.accaglobal.com/an/en/member/find-an-accountant.html?isocount...

You might get a few self recommending.

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Replying to ak1964:
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By Leywood
26th May 2022 12:51

I did a response, no idea where its gone. Pinked for no reason perhaps?!

You cannot use the cash basis for a company.

To find an Accountant, type in google 'find an Accountant' followed by ICAEW or ACCA. Some might self recommend on here.

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Replying to ak1964:
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By Leywood
26th May 2022 12:52

Duplicate

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By ak1964
26th May 2022 12:56

Thank you. So I need to submit accounts on the basis of invoices issued. So, if I may, say one year I invoice 100k but receive 20k, I still file 100k and pay corporation tax on that 100k even though I only received 20k? May I ask how I then adjust that the following year? Thank you.

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By ak1964
26th May 2022 12:55

Thank you. So I need to submit accounts on the basis of invoices issued. So, if I may, say one year I invoice 100k but receive 20k, I still file 100k and pay corporation tax on that 100k even though I only received 20k? May I ask how I then adjust that the following year? Thank you.

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Replying to ak1964:
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By Hugo Fair
26th May 2022 13:34

Adjust what?
This is why you need an accountant (teaching yourself on the fly just means that every answer will generate another question - with no great likelihood of correct results overall).
It's a bit like a first-time driver asking ... now that I've used the steering-wheel to turn a corner, how do I get the car to stop going round in circles?

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Replying to ak1964:
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By Paul Crowley
26th May 2022 14:08

Nothing is that simple
Any accountant could explain face to face about specific bad debt provisions
I think you may well be advised to appoint the accountant now and let him go through the issues

As I said above the logic check one is the turnover comparison with the bank account. You then prepared accounts that did not show the income you declared as income.
In addition you are doing a peculiar and tax inefficient profit extraction. small companies pay a small wage and the balance as dividends
A quick scan of the statements and the bank see loads of their loan being paid to you, which look like dividends being paid to you

The letter you linked says that they will stop you using the loan for non business payments

There are probably a lot of things that the accountant may suggest, as he will have seen lots accounts and been through lots of challenging situations with clients

For the record
I have zero company owners and directors taking money out of the company as self employment. It is not the normal way.

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By ak1964
26th May 2022 13:40

Um okay, so I submit accounts for £100k invoices and pay tax on that even though I only received £20k and that's it - I just pay tax on invoices for which I've not been paid. Noted. Thank you.

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Replying to ak1964:
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By Hugo Fair
26th May 2022 13:53

Not necessarily the cashflow problem you seem to envisage as the tax isn't due until 9 months after your y/e ... unless by then some of the invoices have still not been paid and need converting into 'bad debts' (in which case speak to your accountant).

There's a pattern here!

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Replying to Hugo Fair:
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By Paul Crowley
26th May 2022 14:18

Indeed
The tax issue is a complete red herring.
The tax would not be persued hard and would be refundable when next accounts went if if it is the case that the debt went bad the following year

Pay nothing at 9 months
Submit accounts to HMRC on 12 months, at which time the compete records for the following year are available

So many easy ways to have got this correct
DIY is always subject to not knowing what DIYer does not know

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Replying to Paul Crowley:
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By ak1964
26th May 2022 14:23

Well I have made a mess from start to finish and I suspect it will be a lesson hard learned. Thank you though

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Replying to ak1964:
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By Leywood
26th May 2022 13:53

Well there is more to it than that and some mitigations, but this forum is not here to teach you Accountancy and Tax. Who advised you to set up a limited company, was that even the right way to go? Youve missed points made up thread, which just proves a little knowledge is a very dangerous thing.

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By ak1964
26th May 2022 14:21

Thank you all. I've obviously made a complete mess of everything and suspect the bank will hang me out to dry because of it. Will go and find an accountant although if I am paying tax on money never received and have to repay the bbl in full I suspect I need a liquidator. Thank you all again

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Replying to ak1964:
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By Hugo Fair
26th May 2022 14:50

Please find & appoint that accountant quickly.
No promises - it doesn't sound like your worst case scenario (the liquidator) will be necessary, but you need professional guidance (based on full disclosure) to close these various strands.
Good luck.

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Replying to Hugo Fair:
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By Leywood
26th May 2022 14:54

+1

Such wild assumptions in the first place have created the mess he in in now, so he really shouldnt be compounding them.

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Replying to ak1964:
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By DKB-Sheffield
26th May 2022 16:45

Probably no liquidator at this stage but definitely some professional advice needed (not available of a forum I'm afraid).

Unfortunately, you've misunderstood so much... accounting framework, Corporation Tax, profit extraction, routes to recovery of monies when a customer dies, the purpose/ use of a BBL... there may well be much more besides (VAT, PAYE etc.). A decent accountant would have advised on all this and more.

There will be a cost. Accountants don't (generally) work for free. Do you? I doubt it if your company turns over £100K+ per year.

FWIW it is entirely possibly you will never get taxed on a bad/ written-off debt. However, that wouldn't be via reducing your sales figure!

Finally, your post at 14:21 is reassuring insofar as you state:

ak1964 wrote:

I've obviously made a complete mess of everything

And...

Quote:

Will go and find an accountant

The rest of that post is more piteous suggesting an unfair system, and a bank that is not 'playing fair'. Had you accepted your limits, and had you taken your - now proposed - action in the first place, the chances of being in this position may have been sugnificantly reduced. It's all hindsight - which is great - but, the 'system' is not to blame here.

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By Tax Dragon
26th May 2022 16:39

Absent other information, one might presume that a liquidator, were one to be appointed, would soon start pursuing the estate of your company's deceased customer in relation to its unpaid invoices.

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By Tax Dragon
26th May 2022 17:08

Incidentally (and completely irrelevantly) I quite enjoy the juxtaposition (almost a sandwich) of the three posts I see were made yesterday at 17:16, 18:06 and 20:04 - by fawltybasil2575, Winnie Wiggleroom and DKB-Sheffield respectively.

I think they all say pretty much the same thing - basically "what have you been asked?" - but in markedly different styles.

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