Sharp increase in directors banned for Covid fraud

In the nine months of the 2022/23 year to date (April 1 – December 31 2022), 312 company directors were banned from running businesses because of their abuse of Covid support schemes, compared to 141 in the whole year from April 1 – March 31 2022. The 312 disqualifications related to Covid fraud represent almost half of the 670 total disqualifications so far in the current year.

Over the same period, the average length of director disqualifications has increased by 22%, taking disqualifications from an average of 5.9 to 7.2 years. In December 2022, the average length for director disqualifications reached 8 years.

Insolvency Service taking tough action on Covid fraudsters

The increase in the number of director disqualifications, combined with longer bans, suggests that the Insolvency Service is accelerating its enforcement activity in relation to Covid fraud.

The harsher penalties for directors seen over recent months suggest that the Insolvency Service is looking to send a clear message to directors who misused taxpayers’ money during the pandemic.

Directors are far more likely to commit financial misconduct during times of economic stress, when the survival of their business may be at stake. However, if found out they are still likely to find themselves incurring lengthy bans.

Directors who are concerned that they may have broken any rules relating to Covid support schemes are advised to come forward as soon as possible.

*Year ending March 31 2022