It is currently estimated that the UK Government has lost as much as £16Bn as a result of fraud and error across the emergency COVID-19 schemes such as Bounce Back Loans, Coronavirius Business Interruption Loan Schemes and Furlough to name the three best known.

Latest figures show that the government loaned or guaranteed amounts reaching £129Bn to people and companies during the pandemic to support them financially through lockdown restrictions. However it is now emerging that the government had been warned from the outset that the schemes would be open to fraud.

The furlough scheme is estimated to have suffered the largest fraud and error losses of around £5.3Bn, followed by Bounce Back loans where £4.9Bn is estimated to have been lost. The government has funded a “taxpayer protection taskforce” to chase fraud in the schemes including furlough run by HM Revenues and Customs, however there are concerns that this will not be enough to recoup taxpayers funds.

This taskforce will mean letters hitting beleaguered companies up and down the country, some of which will find their correct mark but others could land on the doorsteps of viable companies who properly utilised the support packages put in place by government.

It’s important to note that provided all government support packages were used for their intended purpose – to further the trading of the company through the pandemic, directors have no cause to fear.

What should you do if you are worried about any financial support received?

The sad fact of the pandemic is that some companies are struggling with the reality of paying back the financial assistance that they legitimately used to fund their business through the period of lockdown. The important point to state is that there are options available to assist in the restructuring of these liabilities, but action needs to be taken quickly to provide a wider range of possibilities. Quick action, taken before creditor pressure increases always can result in a better outcome for all stakeholders.

Some of the possibilities if time allows, include:

• Re-financing;
• Seeking agreement with creditors to longer payment terms;
• Negotiating with HMRC on any amounts owed;
• Asset finance, or invoice financing to help cashflow;
• Asset sales

It is possible however that brown envelopes have begun to overwhelm and at Middlebrooks we can also assist with this. Our experts have a combined experience of in excess of 60 years and have a number of tools which can assist, one of which is a Company Voluntary Arrangement

How can Company Voluntary Arrangement help my limited company?

A Company Voluntary Arrangement, or CVA, is a legally binding agreement with your companies creditors which allows it to pay back a portion of debt owing over a time period set by you, the director who knows your business cashflow best.

In order to be successful a CVA needs to be agreed by 75% of the creditors, by value who vote to support the proposal. A CVA means your company can continue to trade under your direction as usual – you retain control.

With historic debt created by the pandemic, a CVA is the best rescue tool for those viable companies to navigate their way to a positive future. It relieves creditor pressure and provides the breathing space to turnaround your company in a time frame set by you.

Some of the advantages of a CVA bring improved cashflow, relived creditor pressure, one manageable monthly payments to the supervisor (an insolvency practitioner), onerous customer and supplier contracts can be terminated, less public announcement than other rescue procedures and there is no need to disclose the CVA to your company customers.

If your company is struggling or you are worried about repayments beginning on government support packages please don’t hesitate to get in touch to book your free initial consultation with one of our experts.

Our team at Middlebrooks want to guide you through a CVA to be at the centre of your companies positive future.