More on Rishi Sunak’s “Support” for Business
I wrote previously about the lack of detail on the BBC and the main news websites on the schemes announced on Tuesday by Rishi Sunak.
I worried that for many companies to accept any loans or guarantees would put them in fraudulent or wrongful trading territory. I suggested rather more was needed.
It turns out I’m not the only one with concerns.
Richard Murphy’s Tax Research blog has several good pieces on Sunak’s support package and raises similar concerns, but also others.
One piece (click here to read) – includes a worked example, showing precisely why, perhaps in most cases, directors will be unable to accept new loans, and it is precisely because to do so and to continue to trade will mean they will be wrongfully trading.
Another piece (click here to read) – gives rather more information on the way it seems the loan scheme will work, and argues that, leaving aside questions over wrongful trading, very little money is likely to be made available in this way because of the way the scheme will work, in particular because the guarantees are to be given to banks who provide loans to businesses, and the banks will still insist on security, which few businesses will be able to give.
Both articles are well worth reading.