OK - I'm sure this will create a lot of responses...
So I, like I'm sure many of you, have some clients, who, entirely without advice or discussion or consultation of any sort (have I covered my back enough...??) took out bounce back loans, and then promptly paid money out to themselves, either over time, or quite quickly - basically treating the business loan a bit like a personal loan doing what I would consider squarely putting themselves in breach of the loan conditions.
Compasionately, many of these people were desperate during a difficult time, but none-the-less they used the funds in ways that I think they probably should not have - we are talking contractor type companies - the clients in question are, shall we say, a bit unsophisticated financially.
What is the general view of this behaviour? How should it be accounted for in the accounts - a breach of conditions potentially leading to a breach of government grant - that would basically mean a provision for the interest as the government would not owe it, and classify the whole loan as current? It doesn't seem to quite do it justice though.
The above is just a purely accounting perspective.
How are you all advising clients. Clearly the funds are either dividends or directors loan which will be subject to all the normal things (s455, BIK, distributable profits etc). The risk obviously crystalises if there is a default, in which case it would likely end up in the hands of an IP. But what about before then? Before it gets to a bad position
The funds need to be repaid and my clients are being told this. There is no question there.
What is the risk to accountants. If there was fraud on the application that we know nothing about, are we still aiding and abetting? Is this a possible AML matter (I should probably ask the ICAEW)?
I would be really interested to hear what other accountants. This must be really common - I can't be the only accountant starting to see these things come through.