Limited company supporters change tack following an unresponsive Budget 2021

Getting pockets of help to limited company directors, rather than blanket help like DISS will be the new approach of the scheme’s supporters, following Budget 2021 ignoring their pleas.

Outlining the change in tack, the architect of the Directors’ Income Support Scheme told Contractor UK that she and the groups backing it would be “exploring other opportunities”.

“Pockets of support to those that need it… rather than wait for support for all” will be the new focus, said ReLegal Consulting’s Rebecca Seeley Harris, who drew up the scheme.

“[So] we’re not closing the door on DISS but…we’ve always worked on the basis [and will continue to work on the basis of] getting as much support as we can for as many as we can.”

'No way to financially support directors'

The change of direction in the push for covid-19 income support for PSCs comes after chancellor Rishi Sunak used a post-Budget interview to say there is “no way” to provide it.

“With directors, [it’s] been a real challenge, and…my team, my ministerial colleagues have looked at options and met with groups, and there isn’t a workable option,” Mr Sunak said.

The chancellor explained: “We think…there’s maybe around 600,000 of these people -- we don’t actually know because there’s no official way that we know.

“And…we get 3.3 million dividend tax returns, [but] we have no way of differentiating between the 3.3million and the 600,000 -- if that is indeed the right number.

“So if we did provide support it would mean that three out of every four pounds of money from the taxpayer going out, would not be going to the right people. And that is the challenge we’ve been grappling with and we just haven’t – there is no way to square those two things.”

'Chancellor has absolutely no intention of helping'

A Twitter user reflected: “I think it's obvious from Sunak's response that he has absolutely no intention to support limited company directors.

“Our response should be to do everything we can to take the government to the cleaners and uncover the real reasons for these decisions to exclude -- and who was involved.”

At ReLegal, Ms Seeley Harris (who has written a letter to HMT to stress DISS does not include dividends, without any reply) agrees the chancellor’s mind is probably made up.

“I think probably, from the chancellor's point of view, the conversation on directors is closed”, she said yesterday. “[But] I have had various meetings with HMT and HMRC so they have engaged”.

'Verifiable data not held'

Jesse Norman, the financial secretary to the Treasury, said two days after DISS’s no-show at Budget 2021 that the government lacks the information to offer a scheme for PSCs.

"The data that would enable the government to design a scheme for company directors, including who is a working director and what part of their income it would be appropriate to support, has not historically been and is not collected by HMRC because it has not been needed to administer the tax system.”

The minister added: “Information held by other bodies such as Companies House also does not in itself provide the verifiable data to target support to those in need.”

'Treasury fixated on dividends'

The campaign group behind DISS, Forgotten Ltd, responded to Mr Norman’s comments by saying it was “frustrating” when ministers “obfuscate”.

“[The minister’s response] tells us that even though the DISS doesn’t use dividends HMT are still fixated on them,” the group said.

“Their answer is now on the record and so their illogical and selective response can be worked on and challenged.”

'Unfair to say directors are completely unsupported'

In his post-Budget interview, the chancellor suggested that the directors of limited companies have more than a couple of options when it comes to covid-19 income support.

“I don’t think it’s fair to say they are completely without support,” Mr Sunak began.

“They can be furloughed for their PAYE income, and they may be able to benefit from a Bounce Back Loan. And in their personal situation, they may have been able to benefit from the mortgage holiday.”

'Don't know how directors will survive'

But those three don’t add up to adequate assistance for one-person businesses, according to Ms Seeley Harris, formerly an adviser to the Treasury.

“It's a great shame that help was not forthcoming during the pandemic [for this part of the business population] and I don't know how these directors will survive," she said.

“But they really need to be turning their minds to what else they can do in the meantime to create work. It's far from easy in this environment but, needs must. Hopefully, the government will start to put re-start grants out for this sector to encourage growth.”

Online yesterday, Forgotten Ltd directed PSC owners who work from home to fill out a survey on the type of government support they have received, with questions on BBLs, furlough and VAT.

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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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