Tom Davies has acted in prosecution proceedings against a London businessman who was sentenced to six months imprisonment, suspended for 18 months, after pleading guilty to fraud by abusing the Bounce Back Loan scheme.
Bounce Back Loans were a government scheme in which businesses impacted by the pandemic could take out interest-free, taxpayer-backed loans of up to £50,000.
Rajesh Dhirajlal Vaghela from Stanmore received a £25,000 loan before closing his business in an effort to avoid repaying the taxpayer loan.
He was caught through new powers granted to the Insolvency Service in December 2021, which allow it to investigate directors of dissolved companies who are suspected of closing their business to avoid repaying Covid-19 support loans.
Vaghela was a director of RKV Consultancy Ltd, which had traded as a consulting firm from Stanmore since its incorporation in March 2019. In May 2020, he applied for a £25,000 Bounce Back Loan from his bank on behalf of the consultancy.
The loan was paid into the company’s bank account but within a week of receiving the money, Vaghela filed paperwork with Companies House to have the business dissolved, and later transferred all the loan money to personal bank accounts.
The striking-off application to dissolve a company makes clear that creditors, such as a bank with an outstanding loan, should be notified within seven days of applying to close the business and that failure to notify interested parties is a criminal offence.
After RKV Consultancy Ltd was dissolved, in October 2020, the Insolvency Service and cross-government counter-fraud systems identified its closure as probable Bounce Back Loan fraud. Investigators found that Vaghela had not informed his bank of his application to dissolve the consultancy.
Vaghela pleaded guilty to charges under the Companies Act 2006 and Fraud Act 2006 at Willesden Magistrates Court in February 2023 and was sentenced by His Honour Judge Donne KC, on 13 April 2023 at Harrow Crown Court. He was also disqualified from acting as a company director for 3 years.
He had repaid the loan in full before being sentenced and was also ordered to pay £2150 court costs.
Tom Davies is regularly instructed in cases of Fraud and specialises in Financial Crime cases. He has a particular interest in directors disqualification, and has acted in private prosecutions in relation to offences under the Insolvency Act 1986, Companies Act 2006 and Company Directors Disqualification Act 1986. More information here: [Tom Davies Profile]
He was instructed by the Insolvency Service.