This testimonial features a case managed by Mandeep Nagra, Senior Solicitor, in which we assisted a director who had received an Insolvency Service questionnaire as part of an investigation into alleged wrongful application for a Bounce Back Loan and subsequent misuse thereof. Following NDP’s work, the Secretary of State confirmed that director disqualification proceedings would not be pursued.
Our client said that he…..“found everyone to be very helpful, informative and especially calming in what was a very stressful situation.”
The Insolvency Service questionnaire and the Bounce Back Loan issue
NDP were contacted by a Director who had received correspondence from the Insolvency Service (“IS”), including a detailed questionnaire to be completed by him. The questionnaire formed part of the IS’s investigation into whether his conduct might justify director disqualification proceedings.
The questionnaire focused on two issues:
- the turnover figure used in the company’s BBL application; and
- whether the BBL monies were used for the economic benefit of the company.
Directors often underestimate how significant an Insolvency Service questionnaire can be. We have previously explained the common mistakes directors make when responding to Insolvency Service questionnaires, and this case shows how easily misunderstandings over BBL turnover figures can escalate.
The turnover discrepancy raised by the Insolvency Service
According to the Director, he had instructed the firm’s accountant to apply for the BBL on behalf of the company and relied on the accountant to ensure the figures were correct. However, the IS questionnaire stated that the company’s turnover for the 2019 calendar year was £250,013, whereas the company’s turnover for the financial years ending 30 April 2019 and 30 April 2020 was £0 and £73,531.
Given the company had been incorporated before 2019, the IS considered that the turnover figure used in the BBL application was overstated. This formed a central part of the Insolvency Service questionnaire director disqualification investigation.
NDP’s work in preparing the Director’s response
The Director on receiving the questionnaire contacted NDP for their assistance in completing the form on his behalf. At the onset Mandeep highlighted to the Director the importance of answering the questionnaire very carefully, as his answers were being considered with a view to bringing director disqualification proceedings against him.
According to the Director, the accountant had all the necessary figures for the company to apply for the correct BBL amount. Our client had entrusted the accountant to make sure the figures were correct, which he later found out to be incorrect.
In order to complete the questionnaire on behalf of the Director, efforts were made with the Director to obtain all his relevant correspondence and messages with the accountant leading up to the BBL application, and to establish why the incorrect figures were used, and in particular confirmation that the accountant had applied for the BBL on behalf of the company. These were all exhibited with the questionnaire.
Reviewing the use of the Bounce Back Loan monies
The IS also asked whether the BBL funds had been used for the economic benefit of the company. NDP reviewed and analysed the company’s bank statements. According to the Director, all BBL monies were used for legitimate company purposes, and this was supported by the bank statement analysis. This evidence was included in the response to the Insolvency Service questionnaire director disqualification enquiry.
The accountant’s response and NDP’s further representations
After receiving the completed questionnaire, the IS contacted the accountant. The accountant stated that they had simply assisted with the submission of the BBL application and that all information, including turnover figures, had been provided by the Director. They said they had not independently verified the figures and had been told by the Director that the company anticipated future turnover at the level stated.
The Director strongly disputed this account and provided further messages with the accountant confirming his position. NDP prepared a detailed letter of representation, setting out the circumstances leading up to the BBL application and the Director’s reliance on the accountant. The Director also confirmed he was willing to provide a signed statement of truth.
This further material was submitted as part of the Insolvency Service questionnaire director disqualification process.
The Insolvency Service’s decision
Following review of the questionnaire and NDP’s further representations, the IS confirmed that, based on the information available, the Secretary of State did not propose to take director disqualification proceedings against the Director.
The Director was delighted with the outcome, and commented:
“From my very first contact through Email to the conversation with Mandeep I found everyone to be very helpful, informative and especially calming in what was a very stressful situation.”
This case demonstrates that each matter is considered on its own facts by the IS, and that all is not lost when an Insolvency Service questionnaire is received pending apossible director disqualification investigation.
Contact NDP if facing director disqualification allegations
If you are a Director facing an investigation by the Insolvency Service, please contact our experienced team of Director Disqualification solicitors on 0121 200 7040 or at law@ndandp.co.uk for an initial free of charge and no obligation discussion of your case.
Frequently Asked Questions
What is an Insolvency Service questionnaire?
It is a formal set of questions issued by the Insolvency Service to help assess a director’s conduct and decide whether director disqualification should be pursued.
Can a mistake in a Bounce Back Loan application lead to director disqualification?
Yes. The IS routinely investigates BBL turnover discrepancies. However, as this case shows, a clear explanation supported by evidence can prevent proceedings.
Should I get legal help before responding to an Insolvency Service questionnaire?
Yes. Your answers can be used as evidence in an Insolvency Service questionnaire director disqualification investigation. Professional advice is strongly recommended.
What if my accountant completed the Bounce Back Loan application?
You may still be held responsible unless you can show reliance, instructions and supporting evidence. This is a common issue in Insolvency Service questionnaire director disqualification cases.
Can NDP help if I have already submitted my questionnaire?
Yes. NDP can prepare further representations, challenge incorrect assumptions, and provide evidence to clarify your position.
