It could be worse as well because either they haven't declared this income and now HMRC will be after them or they have and they might not be able to get a refu

It could be worse as well because either they haven't declared this income and now HMRC will be after them or they have and they might not be able to get a refund from HMRC. I assume this would be considered a business loss and I'm not sure if you can refund past taxes against a present loss.