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Charges brought by the Insolvency Service against company directors fell by nearly half last year, according to official figures, despite a surge in corporate fraud during the Covid-19 pandemic.
Ninety-five charges were brought in England and Wales by the service during the 12 months to March 2023, down from 174 in the previous year, according to data from the government agency, which as well as handling liquidations has powers to investigate corporate misconduct.
The fall came despite a rise in fraud and error by company directors during the pandemic, with HM Revenue & Customs estimating that about £5bn was lost through the government’s three key financial Covid support schemes.
“The clock is ticking to pursue directors that have fraudulently claimed Covid support. The longer it takes for investigations to start, the harder it is to trace and recoup the funds,” said Michael Pallott, a partner at audit and advisory group Mazars and insolvency fraud specialist.
“It is likely that the Insolvency Service is already under resource constraints due to increasing insolvency numbers throughout 2023,” Pallott added.
In 2023, company insolvencies jumped nearly 14 per cent on the previous year to a 30-year high, from 22,109 to 25,158, according to separate data published by the agency on Tuesday.
Since the pandemic, the recovery of defrauded money and the prosecution rate of the directors responsible has been low. The National Audit Office, the public spending watchdog, last year estimated that of £1.1bn lost to fraud and error through Covid-19 business grant schemes, £11.4mn had been recovered.
The Insolvency Service said it had commenced 113 prosecutions in the year to March 2023, a figure that includes cases that had not been completed by that date.
“We are committed to taking enforcement action whenever it is appropriate,” the agency said.
Of the 1,200 company directors disqualified in the UK between April 2022 and June 2023, more than half were struck off for alleged fraud or abuse of Covid-19 financial support schemes, according to data published by the Insolvency Service last year.
In the 12 months to March 2019, some 146 charges were brought by the Insolvency Service against directors. During the same period in 2020 and 2021, 92 and 62 charges were brought, respectively.
