Spending Review 2020: 'Desperate, excluded limited companies deserve at least a nod'

Even the tiniest of nods at Spending Review 2020 that limited companies deserve better compensation from covid-19 would suffice, says Greater Manchester mayor Andy Burnham.

Speaking last night to ContractorUK, Mr Burnham said Rishi Sunak should use his statement to at least tell such firms with scant covid-19 income support, “I hear your voices.”

Mr Burnham settling for what he called just “some recognition” that PSC workers need better financial help relates to the government claiming, so far, that it is ‘too difficult’ to arrange.

'Treasury now looking at it'

But a new proposal called the Directors’ Income Support Scheme (DISS) was sent to the Treasury last Thursday, in good time for Mr Sunak to review ahead of his package tomorrow.

“It went to the chancellor and the financial secretary,” ReLegal Consulting boss Rebecca Seeley Harris, who wrote the proposal told ContractorUK. “They’re looking at it now.”

Under the DISS, the government would offer “actively trading” limited companies a taxable grant calculated at 80% of three months average monthly trading profits, up to a £7,500 cap.

It would be paid into the company (not to the director personally). And it would be paid as single payment, much in the same way as Self-Employed Income Support Scheme grants are.

'Government has chance to help'

“If the chance to help [PSC] directors arises, and the government doesn’t take it, then it starts to look deliberate,” says Liverpool metro mayor Steve Rotherham, warning the government.

Speaking on a call arranged by Forgotten Ltd, which Mr Burnham joined, Mr Rotherham was asked if the government’s lack of help for PSCs looks like an oversight, or a policy decision.

ContractorUK posed the question given that government policy seems to repeatedly target limited company owners, ranging from the tax on dividends to private sector IR35 reform.

'Director term hijacked'

In his answer, Mr Burnham suggested some parties had sullied the term ‘director’, with the effect that both policymakers and the public now viewed them as well-off individuals.

But six people who each run their own incorporated business, and who joined the mayors in yesterday’s call, admitted to being at the opposite end of the financial spectrum.

Engineer ‘Steve’ said his venture had “not made a single penny in profit” since March, eight months ago, when his clients ‘closed the doors,’ rendering his firm a “zombie company.”

Exercise trainer ‘Andrew’ said that around the same time, he had about 30 care-home clients on his books – now he’s got just a debt of £21,000.

And a tearful ‘Nicola’ would probably like such arrears, as trying to prop up her staff but not herself with cash has snowballed her firm’s debt to more than four times as much -- £90,000.

'Just a little bit of hope, please'

Even more harrowing accounts came from ‘Catherine,’ who has been diagnosed with both covid-19 and clinical depression; ‘Sarah,’ who only started her venture because she needed flexible work so she could undergo treatment for breast cancer, and ‘Gary,’ who passionately begged the government for a “little bit of hope.”

Moved by what they heard (fighting back her tears, Sarah said she’d rather go through cancer treatment all over again than be mistreated like this by the government), the mayors said the chancellor must hear the stories of the ‘directors’.

They both said they would send Mr Sunak the recording.

'Words on Wednesday would be a start'

“It’s getting to the point where you have to start asking the question -- is this a deliberate exclusion or an oversight?” Mr Burnham began, referring to the government's stance on company directors during the pandemic.

“That’s the question the government [is so far] leaving out there. So even if the chancellor stood up [tomorrow to limited companies] and said, ‘It is complicated; I can't give you all the details today but...I hear your voices.’ That, in itself, would be worth everything."

In an almost direct address to Mr Sunak ahead of Spending Review 2020, Mr Burnham also said: “Saying it with words on Wednesday would be a start. But natural justice and fairness says [ultimately], something needs to be done.”

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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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