Chartered accountant keeps her career after Insolvency Service drops disqualification investigation

Suky Mann, was recently instructed by a chartered accountant who had received notification from the Insolvency Service that she was being investigated for allegedly causing her company to obtain a Bounce Back Loan (“BBL”) of £50,000, which it was not entitled to receive, and that she failed to use the loan for the economic benefit of the company.

Background

It was alleged that our client used an estimated turnover figure when the company was, in fact, only permitted to rely on actual figures. The net effect, according to the Insolvency Service, was that she caused the company to receive a BBL much greater than it would have been entitled to if the rules had been followed. It was further alleged that our client failed to use the BBL for legitimate trading purposes.

Our client’s primary concern was the impact a disqualification would have on her ability to continue to work as a chartered accountant.

Our client was convinced she would be disqualified and resigned to this; she had already started looking for alternative employment outside the accountancy sector. Suky, however, was undeterred, and despite the previous steadfast position adopted by the Insolvency Service, she was confident that there was still a persuasive defence to plead.

The challenge

Given our client's accountancy background, the threshold and standard were seemingly much higher. What was unique about this case was the interplay between the technical breach of the COVID-19 loan support scheme, and the mitigating factors affecting our client.

Firstly, the reliance on an estimated turnover in our analysis was entirely permissible on the facts of this case, notwithstanding that the company had been incorporated many years prior to the pandemic. Suky demonstrated that there had in fact been a period of dormancy throughout 2019, making reliance on an estimated figure reasonable.

In relation to the use of the funds, the Insolvency Service identified that the funds were transferred into our client’s personal bank account, but has wrongly assumed the monies were used for personal purposes. Suky prepared a detailed reconciliation showing that the funds were, in fact, used in the ordinary course of business.

Following a detailed letter of representations, the Insolvency Service confirmed it was no longer intending to pursue a ban against the client. 

A great outcome was achieved for the client, ensuring that her professional reputation and ability to trade were preserved.