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Takeaway owner banned for Covid-support fraud

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The owner of a fried chicken takeaway has been served with a meaty seven-year ban on directing businesses after being found to have swindled £50,000 in Covid support scheme grants.

14th Jun 2022
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Ifraz Nabi from Manchester was banned from directing businesses after he was discovered to have wrongly claimed £30,000 from the Eat Out to Help Out Scheme and a further £20,000 from the Coronavirus Job Retention Scheme during the height of the pandemic. 

Nabi’s company, New York Krispy Fried Chicken, located on Stockport Road, Greater Manchester, went into liquidation in November 2020, which triggered a closer investigation by the insolvency service.

During their investigation, agents found that Nabi had not maintained adequate records or accounts. As a result, his claims could not be supported due to a lack of sufficient evidence related to sales during the period and no explanation as to how such sales were possible while staff were furloughed.

Ineligible for schemes

However, even if Nabi’s accounts were sufficient to claim for support, his company was still ineligible for the schemes. According to the rules outlined in the Eat Out to Help Out scheme, only businesses with indoor seating were able to claim, and while Nabi’s restaurant had some indoor seating, most of his sales came from app delivery orders, which were not covered by the scheme.

The Secretary of State for Business, Energy and Industrial Strategy accepted a disqualification undertaking from Nabi after he admitted failing to maintain, preserve or deliver adequate accounting records, as well as failing to register and account for VAT as required.

Nabi’s disqualification began on 31 May 2022 and will last for a total of seven years.

Talking after the sentencing, Nina Cassar, deputy head of investigations at the Insolvency Service said: “Ifraz Nabi failed not only to maintain the accounting records of his company, he failed to register and pay his business taxes, and furthermore abused Covid-19 support schemes designed to support businesses in genuine need.

“This disqualification should serve as a reminder that the Insolvency Service will take action against those who abuse their position and do not take their obligations seriously.”

A wider issue

While the government’s £69bn furlough programme helped support 11.7m jobs at the start of the pandemic, Nabi’s disqualification is yet another example of the wider issue of Covid-support fraud. 

Only recently, AccountingWEB reported on a swathe of Bounce Back Loan frauds that were uncovered dating back to October, with one anonymous reader telling us: “Criminal gangs have exploited the loophole [as it’s] easy to get money without much effort.”

The recent cases seem only to be the tip of the Covid fraud iceberg. According to an article from MSN news, there have already been 143 disqualification cases connected to Covid fraud since April of this year alone, and with a recent PAC report finding that the government has lost a potential £15bn to Covid fraud, it is likely that many more cases will remain undiscovered.

Replies (11)

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paddle steamer
By DJKL
14th Jun 2022 13:26

Does the ban really work as punishment?

Will a friend/family member be found as a front for a reopened business?

Personally I would be happier if there was a stronger mechanism used to recover my money.

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Replying to DJKL:
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By Hugo Fair
14th Jun 2022 23:48

"Happier"? You're in very forgiving/laid-back mode today!

Not only should getting the money back be the numero uno objective (1. it's *our* money; and 2. it's the only form of penalty understood by those tempted) ... but the concept of disqualification is laughable (literally) to those not intent on obeying the law in the first place.

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Replying to Hugo Fair:
paddle steamer
By DJKL
15th Jun 2022 10:45

Not ours, mine.

As far as I am concerned the sums I pay in any tax cover everything that annoys me personally , be it that traffic warden who cannot smile, our MPs and other elected individuals or the ghastly cycle lane thingy they put in across Edinburgh right in front of my mother in laws house, which makes dropping a 90 odd year old individual at her front gate difficult.

I appreciate the rest of you chip in but notwithstanding I still see all waste of taxes as taking place with my personal money.

Thanks (1)
Replying to Hugo Fair:
paddle steamer
By DJKL
15th Jun 2022 11:19

My use of "Happier" has the Edinburgh reserved understatement embedded within same, whilst the rest of Scotland may display something similar to the rage of the Scots in some of the battle scenes in Braveheart , I ,because I am from Edinburgh, can only at most tut and look on disapprovingly- think it is something in the water here.

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Replying to DJKL:
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By Hugo Fair
15th Jun 2022 11:52

I can tell your 'refainement' (my attempt at the Jean Brodie accent) ... so was only teasing about the understatement.
But I'm with you with regard to taking all public waste as a personal slight (with an attempted justification of the puritan stance that it's equally applicable to all)!

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By Hometing
14th Jun 2022 14:06

No mention of it needing paying back....

Where's the deterrent?

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By Donald MacKenzie
15th Jun 2022 11:01

Hopefully this will be taken further and prosecuted as fraud. Disqualification from being a director is not enough.

Thanks (0)
Replying to Donald MacKenzie:
paddle steamer
By DJKL
15th Jun 2022 11:23

It likely will not.

The cost of such a process will likely outweigh the perceived public benefit and the difficulty of getting convictions for anything beyond benefits fraud seems to be woeful. The thought process re pursuing a criminal case being the difficulty of the cases being understood and the high bar re reasonable doubt in such criminal cases.

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By seonaid anderson
15th Jun 2022 11:43

We have one locally ( not our client) where according to the insolvency report leading to companies house ban the company was clearly not trading at the right time and cash was then taken out to buy a personal car (rumour is a porche) before company went into insolvency.

Seems very clearcut so if they don't pursue him personally for fraud that's another failure of the system.

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By Paul Crowley
15th Jun 2022 11:49

This just demonstates that nothing much happens and confirms why crooks consider the risks trivial.
Ignore all compliance obligations and............nothing much happens.

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FirstTab
By FirstTab
15th Jun 2022 12:10

It appears his customers were happy. Stupid of him.

https://www.google.com/search?q=New+York+Krispy+Fried+Chicken&rlz=1C5CHF...,,,

Stupid of him.

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