Covid-19: Rishi Sunak stands by his scant offering to limited company directors

Rishi Sunak is being asked for “flexibility” for contractors who narrowly missed the furlough scheme, in what looks like a final bid to boost the chancellor’s scant covid-19 income support for PSCs.

In a letter to Mr Sunak, the chair of the Treasury Select Committee points out that due to following “normal practice” on salary, some directors “missed out” on the Coronavirus Job Retention Scheme.

The letter from Mel Stride MP comes after the chancellor went before the committee, albeit only to “effectively draw a line under helping the million-plus people,” like PSC owners, with little support.

'Suffering'

After Mr Sunak’s appearance, Mr Stride also said: “While the government is clear that it is moving on to the next phase of its recovery plan, it cannot just turn its back on those who are suffering.”

In the virtual committee session, the chancellor was asked whether there was “anything other” than “administrative complexity” which was stopping him from helping out 700,000 PSCs.

“There is a significant degree of administrative complexity,” agreed Mr Sunak, echoing comments made by prime minister Boris Johnson when he too was probed about why dividends cannot be included under the CJRS.

“The fact that we’ve been able to do so much that people thought we were not able to do, I think ought to actually prove the point that if there was an easy thing that we could have done, and done at scale, speed and protect against fraud and make sure the support was targeted, and obviously affordable…we would have done it.”

'It's not as if there's no help for limited companies'

Most controversially, the chancellor added: “The group of people you mention, it’s not as if there is no support available.

“Many of them choose to pay themselves up to the income tax threshold through PAYE. Obviously, that part of their earnings may be eligible [for inclusion under the CJRS].”

Qdos, a status advisory for contractors, said Mr Sunak’s response will “dishearten” those who work for themselves, as many have been left financially “stranded” by the government during the pandemic.

“This is a very disappointing response,” reflected Labour MP Angela Eagle.

“The government should have done more to support the excluded who have lost livelihoods through no fault of their own.”

'Suicide risk'

One affected taxpayer, Matt Keen took to social media to appeal: “I've paid taxes for 30 years, yet when I need some financial help, there's nothing because I'm registered as a limited company.

“Yesterday there was an interview on BBC Breakfast with someone in the same boat who talked about suicide. Suicide.”

Addressing the chancellor directly, Mr Keen then asked: “What will it take for you to acknowledge the stress and hardship that three million people are going through…?”

'Poptastic'

Similarly going online to try to get Mr Sunak’s attention, the lobby group Forgotten Ltd took the unconventional approach of holding up a dead plant to represent limited company directors.

“How simple do we need to make this?” it asked.

The group also recorded a short clip of a funk singer who it commissioned to jingle the chancellor into changing tack. Fans are calling the three-minute ‘What about the jobs?’ a “poptastic” future number 1 hit.  

'Sunak has utterly failed'

But in an article for Tory party blog Conservative Home, LBC’s Iain Dale failed to see the funny side of Mr Sunak’s oversight.

“He has utterly failed to help the so-called ‘excluded three million’ – the self-employed and company directors.

“These are natural Conservative voters,” he wrote, “and they won’t forget how they have been ignored.”

'Incredibly short-sighted'

At Qdos, CEO Seb Maley also foresees ramifications for excluding limited company directors and other independent workers from financial support during the coronavirus lockdown.

“People new to self-employment, hundreds of thousands of contractors and many other independent workers have been all but ignored -- allowed to slip between the cracks or overlooked altogether.

“Even if the lack of government help for independent professionals is somewhat predictable, it’s still incredibly short-sighted,” he said. “After all, the skills and flexibility offered to businesses by freelancers and contractors will prove instrumental in the economic recovery.”

'Deeply disappointed'

To help both them and HM Treasury, the Association of Independent Professionals and the Self-Employed drew up a ‘pay now, clawback later’ model for HMRC, so it could support limited companies with their dividends.

But the association is now “‘deeply disappointed” to learn that the model has been rejected by Mr Sunak, who referring to limited company owners said to Mr Stride in a stark understatement: “It may well be they haven’t got exactly what they wanted.”

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Written by Simon Moore

Simon writes impartial news and engaging features for the contractor industry, covering, IR35, the loan charge and general tax and legislation.
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