Defiant Rishi Sunak stands firm on leaving limited company directors stranded

Rishi Sunak has simply repeated himself to reject an impassioned yet evidence-led plea to give droves of limited company directors covid-19 income support.

The chancellor says in a letter that he does not accept that there are “3.3million” such individuals, and that he does not believe that “excluded” correctly describes their situation.

Mr Sunak also states that as about half the HMRC customers identified are employed for over half of their income, that they should therefore be covered by the furlough scheme.

All three reasons from the chancellor to not adequately assist directors have been given by him before – in exactly the same order, just two months ago at Spending Review 2020.

'Strongly-worded'

Unsatisfied with Mr Sunak’s stock reply, the architect of a scheme designed to financially support directors has now written what she called a “strongly-worded” letter to the chancellor.

Rebecca Seeley Harris, who drew up DISS in November and who has written the letter on behalf of the Gaps in Support APPG, tells Mr Sunak in it: “We take issue with your replies.”

She adds: “Neither the government nor the trade associations to which you refer understand the technicalities of the field of self-employment and small business.”

'Nearly a year of nothing meaningful'

Until now, the campaign to get the chancellor to adopt DISS had resisted such a straight-talking, critical approach.

Potentially explaining the change in tone, a post on LinkedIn by Forgotten Ltd points out that it has now been “nearly a year without any meaningful financial help from the government.”

Addressing limited company workers directly, the group added: “Please don’t forget in these crucial weeks running up to the Budget…hounding your MP is now more vital than ever.”

'Further pressure'

But APPG Gaps in Support worries that even acting on March 3rd would be to leave it too late. In its letter signed by more than 60 cross-party MPs, the group tells Mr Sunak:

“These people [directors] desperately need support, and now. We urge you to accept that any further delay, even until Budget day, would pile further pressure on this group.”

Last week, the chancellor reportedly committed to maintaining the ‘triple tax lock,’ meaning that income tax, national insurance and VAT will be off-limits for increases in his Red Book.

'Denied access'

But while honouring the Tory party manifesto of 2019 might win Mr Sunak support from his colleagues on the backbenches, it may further erode his support base among business-people.

In fact, if the chancellor sticks to his word to leave the lock in place, it raises the prospect that he will instead hike corporation tax and CGT; each of which company directors already reeling from being ‘excluded’ will not want increased.

“The word ‘excluded’ means ‘to be denied access to a place, group, or privilege’, and that is exactly what has happened here,” states the APPG letter, in a war over words with Mr Sunak.

'Extremely challenging'

“We appreciate that these are challenging times for the Treasury but that is no excuse for failing to take time to understand this issue, especially when you have been presented with the evidence.

“These taxpayers have been frozen out of their legitimate support, through no fault of their own and in their time of greatest need, when their government should be supporting them.”

A Kingsbridge Contractor Insurance survey of almost 800 contractors shows that 44% have lost work or contracts due to covid-19, and that “lack of government support” has been “extremely challenging” for the single biggest group of respondents (33%), more so than seven other issues during the pandemic, including financial worries and even personal health.

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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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