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So over the last two weeks, I had discussions with various Chartered Accountants on bounce back loans, while these are being used by a lot of businesses on a geniune need. I found that there still are a lot of small businesses that have taken these money purposely either to not pay back deliberately or to recycle these back to property.

One friend of mine who is an accountant, told me that approx 10. of his small clients who are aspiring to be first time buyers have only taken these loans to help with the deposit of their first property.

I am HPCer but its quite possible that this bounce back loans, actually bounce back property to the dismay of a lot of us here....

Edited by warrior88
grammar check
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9 minutes ago, warrior88 said:

One friend of mine who is an accountant, told me that approx 10. of his small clients who are aspiring to be first time buyers have only taken these loans to help with the deposit of their first property.

I had a look into this, essentially if the company becomes bankrupted and goes through liquidators, if the loan has clearly been "personally directed" at the directors benefit then the liquidators can chase them personally for recovering of the amounts.

The loan has clear descriptive usage case (i.e. not straight personal gains).  I wonder if we need to start a campaign to enforce their actual usage.... we've been told around here too often "wont be investigated due to gov guarantees" but how is this not fraud?

If I was a FTB to use this path, surely the HMRC could (as often demonstrated) have recourse and pursue years down the line?

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There's already a thread on this.

I think it may come back and bite people. The idea of them is that they're for businesses in distress and they can't be used to purchase new fixed assets unless these are a replacement for existing ones. 

If they're self-employed then won't the mortgage lender find out that the money's come from a loan? They've also identified themselves as a credit risk.  Even if it's obfuscated by the loan going to a limited company, they've then identified their limited company as being "in distress" and a credit risk.

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2 minutes ago, Clarky Cat said:

If they're self-employed then won't the mortgage lender find out that the money's come from a loan? They've also identified themselves as a credit risk.  Even if it's obfuscated by the loan going to a limited company, they've then identified their limited company as being "in distress" and a credit risk.

Correct.  Hence i'm confused ... is this all "noise" ?

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https://www.realbusinessrescue.co.uk/articles/business-liquidation-bankruptcy/understanding-directors-loan-accounts-and-liquidation

So lets say the director takes the loan amount out, via a directors loan, and attempts to liquidate the company soon after.

From the link above: 

"The loan(s) must be repaid regardless of your personal financial circumstances - being unable to repay an overdrawn director’s loan account in liquidation introduces the risk of personal bankruptcy as well as other sanctions being made"

"The liquidator will pursue you through the courts for the monies owed"

So yes I'm starting to wonder is it really worth the risk?  And at this point we're not even talking about HMRC risk.

Edited by blackhole
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Depends how many you get out.. cash purchase..

The average loan size is £25k to over 800,000 companies.

Given the whole host of people self employed taking 2/3/4/5k to see them through thats an awful lot of companies with £200k turnover to bring up the average, or fraudulent claims.

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2 minutes ago, blackhole said:

https://www.realbusinessrescue.co.uk/articles/business-liquidation-bankruptcy/understanding-directors-loan-accounts-and-liquidation

So lets say the director takes the loan amount out, via a directors loan, and attempts to liquidate the company soon after.

From the link above: 

"The loan(s) must be repaid regardless of your personal financial circumstances - being unable to repay an overdrawn director’s loan account in liquidation introduces the risk of personal bankruptcy as well as other sanctions being made"

"The liquidator will pursue you through the courts for the monies owed"

So yes I'm starting to wonder is it really worth the risk?  And at this point we're not even talking about HMRC risk.

You would do a dividend or salary not just directors loan.

Even if you did just take the cash out brazenly and applied to strike the company off a creditor i.e the bank has to intervene and stop the process and appoint that liquidator to act in their interests.

Edited by captainb
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1 minute ago, captainb said:

You would do a dividend or salary not just directors loan.

Most accountants would mark this as a directors loan as your not taking dividends out of profit.  Otherwise its an illegal dividend (hence being made into director loans).

2 minutes ago, captainb said:

Even if you did just take the cash out brazenly and applied to strike the company off a creditor i.e the bank has to intervene and stop the process and appoint that liquidator to act in their interests.

True, I wonder if that's a condition of the government bailout (i.e. the bank has to attempt to recover funds) ?

So yes this is all possible with a "shady accountant". And a cash purchase perhaps.... assuming solicitor doesn't ask where the money came from.

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Just now, blackhole said:

Most accountants would mark this as a directors loan as your not taking dividends out of profit.  Otherwise its an illegal dividend (hence being made into director loans).

True, I wonder if that's a condition of the government bailout (i.e. the bank has to attempt to recover funds) ?

So yes this is all possible with a "shady accountant". And a cash purchase perhaps.... assuming solicitor doesn't ask where the money came from.

I do not think you need a shady accountant.

Just moderate niaveity and incompetence, to do it and see what happens.

There were no conditions for these loans. I think this is the bit people "dont get". The bankers pointed out the massive fraud risk before these were dolled out as did figures in the treasury. Bankers indemnified with 100% guarantee of all losses. And treasury told to shut up and do it.

Mad rush of policy which doesnt stand upto logic. Having the person issuing the loan (bank) being covered 100% for all losses is madness. For a start there is no incentive to actually collect - let alone appoint liquidators etc.

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1 minute ago, captainb said:

Mad rush of policy which doesnt stand upto logic. Having the person issuing the loan (bank) being covered 100% for all losses is madness. For a start there is no incentive to actually collect - let alone appoint liquidators etc.

Well lets see if such a clause exists (i.e. bank has to attempt to recover amounts) otherwise it is exactly as you say - mad rush with "unintended" consequences.

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7 minutes ago, captainb said:

I do not think you need a shady accountant.

From what I understand, extracting a loan out as a dividend (not profit) = converted to director's loan if the accountant remains within the lines.  Happy to be proven wrong, though.

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A mate works for a bank, one of his jobs right now is the handling of these loans. First line people basically check the obvious, “do they say themselves they’re eligible”. Mates job is to do a tiny bit more digging on any flagged up. So you get 25% of your turn over up to 50k loan, he said it’s amazing how many companies have a 200k turn over! He said there’s lots of lies but they’re not provable lies and so they’re being instructed, unless they can prove something is a lie to give out the loans and he is hating it - his actual job pre-cv19 was compliance.

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1 hour ago, scb said:

A mate works for a bank, one of his jobs right now is the handling of these loans. First line people basically check the obvious, “do they say themselves they’re eligible”. Mates job is to do a tiny bit more digging on any flagged up. So you get 25% of your turn over up to 50k loan, he said it’s amazing how many companies have a 200k turn over! He said there’s lots of lies but they’re not provable lies and so they’re being instructed, unless they can prove something is a lie to give out the loans and he is hating it - his actual job pre-cv19 was compliance.

Brilliant as expected, normal loan prove what you say. 

100% taxpayer backed.. We have to prove your lieing.. Which given no public documents on turnover to 31st dec 2019 is a tall ask

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5 hours ago, scb said:

A mate works for a bank, one of his jobs right now is the handling of these loans. First line people basically check the obvious, “do they say themselves they’re eligible”. Mates job is to do a tiny bit more digging on any flagged up. So you get 25% of your turn over up to 50k loan, he said it’s amazing how many companies have a 200k turn over! He said there’s lots of lies but they’re not provable lies and so they’re being instructed, unless they can prove something is a lie to give out the loans and he is hating it - his actual job pre-cv19 was compliance.

Yes thats what I gather has been happening....

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  • 415 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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