Insolvency Service shuts down 2 companies for fraudulently obtaining COVID support

Two companies have been wound up in the courts after they were found to have fraudulently applied for thousands of pounds worth of COVID support loans.

The two companies submitted forged documents to more than 40 local authorities and the government’s Bounce Back Loan Scheme to secure £230,000 worth of grants.

Following an investigation ​​by the Insolvency Service, the companies (LV Distributions Ltd and SIO Traders Ltd) were wound up in the High Court after it was discovered neither company ever traded.

SIO Traders claimed it supplied PPE and secured £95,000 worth of business grants from 10 local authorities. The company also received a £50,000 Bounce Back Loan it was not entitled to.

LV Distributions claimed to sell medical care products and fraudulently secured £35,000 in business grants from two local authorities, as well as a £50,000 Bounce Back Loan. 

LV Distributions had registered its offices in Redhill, Surrey, but provided false lease documents and utility bills to 27 different local authorities claiming to trade out of premises in their area. Investigators later uncovered that no such entity existed at the various premises it claimed to operate from.

SIO Traders registered their offices in Whitchurch, Shropshire, but used false documents to attempt to extract grant money from 14 different local areas.

Small Business Minister Paul Scully said that the government was cracking down on COVID fraud across the board and doling out heavy consequences to those who tried to take support they were not entitled to.

“This decisive enforcement action shows that we will not tolerate shameless attempts to defraud the taxpayer and falsely claim public money intended to help businesses through the pandemic,” Mr Scully said.

Herefordshire County Council was targeted twice by SIO Traders. The local authority initially paid £10,000 after SIO Traders’ first fraudulent application, but was able to recover the funds in full before rejecting a second £10,000 application and reporting the company’s activities.

They also received a £10,000 application from LV Distributions, which was rejected.

Herefordshire Council member Liz Harvey said, “We have spent more than a year allocating millions of pounds of financial support for local businesses who have been affected by the pandemic. 

“To see companies trying to take advantage of this difficult and unprecedented situation, and fraudulently claim support that is intended to help those who really need it, is despicable."