For blagging two BBL’s when only allowed to have one, the Company Director named in this case is today starting an 11 year ban.
Bounce Back Loan On 5 May 2020
The Theophanous Project Limited (“TTP”) applied for a Government backed Bounce Back Loan with Lender 1 (“BBL1”) totalling £50,000. Thereafter the BBL1 was paid into TTP’s Bank account held with Lender 1 on 14 May 2020.
On 29 June 2020, Mr Kris Theophanous caused TTP to apply for a second Government backed Bounce Back Loan with Lender 2 (“BBL2”) totalling £40,000, for which it was not eligible, by including inaccurate information within the application by not declaring that it had previously applied for and obtained BBL1.
Thereafter, the sum of £34,424 from BBL2 was paid into TTP’s Bank Account held with Lender 1 on 29 June 2020 (the remaining £5,576 having been applied to TTP’s outstanding Lender 2 credit card account balance) and was not used in its entirety for the economic benefit of the business.
In that:
Eligibility: Multiple applications – BBL2
- The BBL Scheme was limited to a business applying for and obtaining one BBL per business.
- On 29 June 2020, Mr Kris Theophanous, on behalf of TTP, applied for and subsequently received BBL2 from Lender 2 in the sum of £40,000, despite TTP having already applied for and received BBL1.
- The completed BBL application form for BBL2 failed to declare that TTP had previously made a successful application for BBL1 in the sum of £50,000 having received these funds into its bank account on 14 May 2020.
- BBL2 was paid into TTP’s Bank Account on 29 June 2020.
Use of monies obtained – BBL2
- The BBL2 application form signed by Mr Kris Theophanous required the applicant to declare that the BBL funds would be used to provide economic benefit of the business, wholly for business purposes and not personal purposes.
- Following receipt of funds in the sum of £34,424 from the BBL1 funds into its Bank account on 29 June 2020, a payment in the sum of £30,000 was paid to Mr Kris Theophanous personally on 30 June 2020.
- Mr Kris Theophanous has confirmed these funds were then utilised to make payment to a private landlord.
- Lender 2 confirm that no repayments were made towards BBL2 and it was required to make a claim was made to the British Business Bank in respect of the outstanding balance.
Trading to the detriment of HMRC
- Mr Kris Theophanous failed to ensure that TTP complied with its statutory duties to make payments to HM Revenue and Customs (“HMRC”) when due and caused TTP to trade to the detriment of HMRC from at least 7 December 2020 in respect of VAT, from 22 October 2020 in respect of PAYE/NIC and from 1 May 2021 in respect of Corporation Tax, until liquidation.
- As a result, VAT liabilities (including surcharges) in the sum of at least £60,651.21, PAYE/NIC liabilities in the sum of £45,217.43 and Corporation Tax in the sum of £7,922.92 remained overdue and outstanding as at liquidation.
- VAT TTP was registered for VAT from 31 August 2018. TTP filed VAT returns in respect of VAT periods 04/20 to 01/21.
- VAT due in respect of VAT period 04/20 was not due until 31 March 2021 under HMRC’s VAT deferral scheme. Period 07/20 was discharged in full.
- VAT periods 10/20 to 01/22 all remained outstanding in full on liquidation. VAT period 10/20 was due for payment by 7 December 2020.
- VAT and surcharges in respect of periods 04/20 to 01/22 in the total sum of £60,651.21 remained overdue and outstanding on liquidation.
- The final payment made towards TTP’s VAT liabilities was made on 18 June 2021. PAYE Information obtained from HMRC indicate that PAYE/NIC in the sum of £45,217.43 remained outstanding on liquidation.
- Payments and credits applied to TTP’s PAYE/NIC account are sufficient to discharge its PAYE/NIC liabilities in full up to Month ended 5 September 2020 (Month 5 of tax year 2020/21) in full.
- TTP was unable to meet its PAYE/NIC liabilities in full from month ended 5 October 2020 onwards. Month ended 5 October 2020 was due for payment in full by 22 October 2020.
- The final payment made towards TTP’s PAYE/NIC liabilities was made on 1 August 2020.
- The balance on TTP’s PAYE/NIC ledger records an overdrawn balance in the sum of £45,217.43 up to month ended 5 April 2022, and due for payment in full by 22 April 2022.
- TTP subsequently entered liquidation 4 days later on 26 April 2022. Corporation Tax Corporation Tax in the sum of £7,112 was due in respect of period ended 31 July 2020, and was due for payment in full by 1 May 2021.
- Corporation Tax in the sum of £810.92 was due in respect of period ended 31 August 2020, and was due for payment by 1 June 2021.
- No payments were made towards TTP’s Corporation Tax liabilities at any stage and the total sum of £7,922.92 remained outstanding on liquidation.
- Comparative treatment HMRC is understood to be the majority creditor in the liquidation.
- Trade creditors are understood to be owed £nil and the Banks £95,246.05 in respect of BBL1 and BBL2, overdrawn account balances and commercial credit cards.
- The available bank statements record that from 22 October 2020 to liquidation on 26 April 2022, TTP’s current account received credits totalling £403,804.58 and expended £407,567.09, of which payments of £5,000.90 were made to HMRC from the account.
- TTP’s current account records that Mr Theophanous received payments from TTP totalling £47,080.04 over the same period.
