News |Insolvency

7th June 2022

Latest judgment against director who abused Covid-19 support schemes

The sole director of a Manchester takeaway has been banned for seven years for wrongly claiming £50,000 through the furlough and Eat Out to Help Out schemes during the coronavirus pandemic.

Ifraz Nabi ran New York Krispy Fried Chicken on Stockport Road, Greater Manchester, until its liquidation in November 2020. The insolvency process triggered an Insolvency Service investigation which uncovered Nabi’s abuse of the government’s Cvoid-19 support schemes.

Nabi’s business claimed £30,000 through the Eat Out to Help Out scheme and more than £20,000 through the Coronavirus Job Retention (furlough) Scheme. However, there was insufficient evidence of sales made during the qualifying period and “no explanation of how such sales could have been achieved while staff were on furlough.”

Additionally, the takeaway would not have qualified for Eat Out to Help Out funding, anyway, as the scheme was for restaurants with indoor seating and New York Krispy Fried Chicken had few indoor seats and received most of its orders through food delivery apps.

On top of his abuse of the pandemic relief schemes, Nabi did not register the business for tax and liquidators “were unable to assess how much the company owed in unpaid tax”. Nabi “admitted failing to maintain, preserve or deliver up adequate accounting records, as well as failing to register and account for VAT as required”, resulting in his disqualification from holding directorships for seven years. The disqualification is effective from 31st May 2022.

In relation to the case, the Insolvency Service’s Deputy Head of Investigations, Nina Cassar noted that “[o]ne of the main purposes of the Company Director’s Disqualification Act is to ensure that company directors adhere to minimum standards.” She warned that “the Insolvency Service will take action against those who abuse their position and do not take their obligations seriously.”

This is the latest Covid support scheme-related disqualification following an investigation by the Insolvency Service. It is no secret that millions of pounds from relief schemes were misappropriated by company directors – many more cases like this one will be uncovered as insolvency proceedings trigger further investigations in the future.

Fraud investigations by ESA Risk

If you suspect that a fraud has occurred within your business and need advice or support on the next steps, we’re here to help.

Contact Mike Wright, Risk Management & Investigations Consultant, at mike.wright@esarisk.com, on +44 (0)843 515 8686 or via our contact form to find out more.

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