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Client has 2 bounce back loans

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It has come to my attention that a fairly new client of mine has obtained two bounce back loans with separate banks. Their business has been severely impacted by COVID (unable to furlough) and most of the two loans have already been drawn out. Director currently has an overdrawn loan account and mentioned that they intend to declare a bonus through PAYE to clear the loan and then let the company fold (with zero intention of repaying the 2x BBLs).

I assume I need to make a ML report, but wondering if I have any other obligations (particulary with regards to the 2 loans). I'm aware you can report furlough fraud etc via HMRC, but wondering if this is the appropriate place to deal with the loans?

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RLI
By lionofludesch
03rd Jul 2020 17:25

I hope the banks don't get paid out because it looks like they've not done enough work on these applications.

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Replying to lionofludesch:
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By memyself-eye
06th Jul 2020 10:09

The banks don't do any work on vetting these applications - why would they, they're not on the hook when the loans default!
I have some sympathy for the banks - they were chastised over the last recession, have been penalised over PPI insurance and have to repay dozy customers that give their life savings to scam merchants.
They're more vilified than accounta....err estate agents.

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By ireallyshouldknowthisbut
03rd Jul 2020 17:36

The exact scenario predicted within about a nano-second of them being announced with no director's personal liability. The naivety of government is quite frankly breathtaking.

Can I correct the first line from "a fairly new client of mine "

To "An ex-client sacked today"

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By Paul Crowley
03rd Jul 2020 17:43

Every possible report to every possible organisation. The bonus it an outright fraud

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By GlobalTax
03rd Jul 2020 17:52

I have heard this from other clients where builders have two bounceback loan from two bank accounts (one bank account from when they were self employed then converted to limited company). Yes many will now dissolve the company and does anyone care - nope. Makes me so so angry.

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boat
By SouthCoastAcc
03rd Jul 2020 22:08

I bet they don't even pay across the payroll taxes

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Replying to SouthCoastAcc:
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By GlobalTax
03rd Jul 2020 22:48

Quote:

I bet they don't even pay across the payroll taxes

Well probably they don't pay the VAT either. Hence why HMRC was going to introduce the reverse VAT scheme.

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David Winch
By David Winch
04th Jul 2020 12:28

At risk of stating the obvious, the accountant has a duty of confidentiality to his client. No information should be provided to HMRC about the client's financial affairs without the prior agreement of the client.
So if you want to 'shop' the client to HMRC you first need the client's consent to your doing that.
The position is different with regard to a Suspicious Activity Report to the NCA because of s337 & s338 Proceeds of Crime Act 2002.
David

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Replying to davidwinch:
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By Paul Crowley
04th Jul 2020 14:50

Nothing yet to report to HMRC
But second BBL was a clear fraudulent application. They surely could take immediate action if aware. Is OP clear of consequences if he just informs the people who really only care about terrorism and big sum international fraud?

Last ACCA CPD lecturer suggest authorities complained that accountants reports were all irrelevant tiny self protection reports that wasted the NCA time, but also accountants do not send in enough of these time wasting reports

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Replying to Paul Crowley:
David Winch
By David Winch
04th Jul 2020 15:17

If you think that HMRC do not get information from SARs submitted to the NCA, then think again!
But do remember that the NCA receive hundreds of thousands of SARs every year. If you want your SAR to be acted upon, do include appropriate XX glossary codes (see recent info on AWEB), do include self-assessment tax refs / VAT numbers if relevant, do include a narrative that explains (to a non-accountant!) what you suspect, who you suspect & why it is illegal.
In this particular case the OP does not suggest that he was himself instrumental in obtaining the BBLs for the client.
So if he makes a SAR & he does not inform HMRC then I cannot see that there would be adverse consequences for him.
P.S. The relevant glossary codes would appear to be XXCVDXX and XXGPSXX.

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Replying to davidwinch:
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By Paul Crowley
04th Jul 2020 21:55

Much appreciated
But probably months before the defrauded bank with second BBL finds out even though OP knew all along.

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Replying to Paul Crowley:
David Winch
By David Winch
05th Jul 2020 08:25

Yes but the OP's reporting obligation arises when he suspects that the borrower has received money from a fraudulent application (not when the bank loses money).
David

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Replying to davidwinch:
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By awoo7876
06th Jul 2020 09:32

Thank you for your comments, they are most helpful. I was not involved in any application, advice etc and the information has come about as I have chased for year end accounts info. I have suggested one be immediately repaid if the second claimed in error, but that fell on deaf ears.
My priority is ensuring I have carried out my duties should anything happen! I appreciate in the grand scheme of an AM report is is probably small fry, but suspect that does not negate the need to carry out our reporting duties.

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Replying to awoo7876:
David Winch
By David Winch
06th Jul 2020 10:00

Yes, if you suspect (or more than suspect!) that the person has obtained a loan advance (however small) by fraud then you have an obligation to file a Suspicious Activity Report.
David

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By Paul Crowley
04th Jul 2020 22:16

And still claiming furlough until that well dries up?

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By pauljohnston
07th Jul 2020 10:12

Thanks to David Winch for again clarifying

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