COVID-19 Update 13 July – Bounce back loans and Furlough error amnesty - Wright Vigar
 In Advice, Blog, News

Bounce Back Loans

The ease of application and minimal checks for the Bounce Back Loan (BBL) along with the understanding that sanctions for ‘wrongful trading’ have been suspended temporarily, has led to many directors taking out a BBL and spending the money without considering the implications. In cases where companies did not meet the eligibility for a BBL, directors may have exposed themselves unwittingly to future risks.

Where the BBL has been utilised to essentially take care of different loans and pay off creditors when the company was technically insolvent, the office holder may well look to recuperate these funds, so they can be distributed fairly to all creditors. In addition, despite the temporary suspension of the wrongful trading sanctions, the office holder is still required to examine the conducts of the directors and report as needs be.

The government guidance is that loans should be used “for the economic benefit of the business, which may include wages”. It is important that directors do not, accidentally, store up inconvenience for themselves by doing what they believe is the correct thing. We recommend that you seek professional advice if you are in any doubt.

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Furlough error amnesty

Where the employer was not entitled to claim under the CJRS, HMRC will be able to recover the money paid. It will work by enforcing an income tax charge proportionate to 100% of the CJRS grant to which the beneficiary was not entitled to and has not been repaid.

However, employers who have furloughed employees without meeting the formal conditions of the scheme will be able to take advantage of a new ‘amnesty’ to repay sums without further sanctions or penalties.

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