Millions of forgotten limited companies still without Government support

Well over 100,000 signatures were obtained in support of TaxAssist Accountants’ petition for a coronavirus support package for the millions of owner-managed businesses operating under a limited company.

However, despite there being widespread support for the plight of these business owners and backbench MPs debating the petition in the House of Commons on 17th September, no further actions have been taken or response given.

The issue for many limited company directors is that they opt to take only a small salary via PAYE, with the bulk of their income being received through company dividends.

Although limited companies can avail themselves of the furlough scheme, they can only claim for their salary paid via PAYE and not their dividend income for the time they are not working, leaving millions significantly out of pocket through no fault of their own.

According to the ForgottenLtd campaign, as many as 7.5 million jobs are at risk as a result, with their plight debated recently on Good Morning Britain.

TV Presenter Piers Morgan was perplexed at the Government’s inability to provide a solution to limited company directors despite seven months having now passed since the furlough scheme was launched.

During the Good Morning Britain show, Mr Morgan interviewed Gemma Godfrey, Executive Editor of The Times Money Mentor, who agreed that the Chancellor Rishi Sunak needed to “fix and fine tune” the scheme.

Ms Godfrey pointed to its current “broad” nature, largely due to the Government needing to “get out a scheme very quickly” when COVID-19 struck in March. However, she insisted that the Government has now seen “millions of people miss out the first and second time” for the furlough scheme – up to 2.9 million in total.

The struggles of limited company directors were discussed at Prime Minister’s Questions on 11th November where the House of Commons heard that millions were “desperately waiting for the Chancellor to address this injustice”.

Daren Moore FCCA, Group Commercial Director at TaxAssist Accountants, said: “Despite MPs debating our petition and fine-tuning it’s support packages for businesses impacted by the COVID-19 crisis, the Government’s actions suggest that they believe these  small businesses are undeserving of financial support as they must be rich enough already.

“They are not, and after seven months without any income they are facing real financial hardship, with little support available. We believe the Government should recognise just how important these companies are to our economy and introduce schemes to fund these forgotten millions.”

New research from the University of Edinburgh Business School also found that 90% of highly-skilled freelance professionals were unable to access support from either the furlough scheme or the Self-Employment Income Support Scheme, with almost three-quarters (73%) operating through their own limited companies.

Chloe Jepps, Head of Research, the Association of Independent Professionals and the Self-Employed (IPSE), said on the figures: “The plight of contractors working through limited companies can make for difficult reading because this group has not just been forgotten, but actually abandoned by the Government.”

Mr Moore concluded “We’ve been very impressed with the continued campaigning by the #ForgottenLtd group of supporters for those who have been affected by the gaps in grants and funding this year. We want to see a debate date secured for our petition which we’ve waited more than 60 days for to address this lack of parity among the business community.”

Date published 16 Nov 2020