TaxAssist Accountants urges Chancellor: “review the support schemes now to ensure small businesses receive support they need”
TaxAssist Accountants has written to The Chancellor again urging that he reviews the support measures in place for businesses and self-employed so all small firms receive the aid they urgently need during the Covid-19 pandemic.
Dear Chancellor (open letter)
We wrote to you at the beginning of April to congratulate you on the speed of your response to the COVID-19 pandemic and to highlight sections of the business community who were not receiving the help and support they needed.
In recent weeks you have made several announcements and introduced initiatives dealing with some of the concerns we expressed. The challenges we referred to around speed of funding and cash flow difficulties have been largely addressed by the acceleration of the Self-Employment Income Support Scheme (SEISS) and Bounce Back Loan Scheme (BBLS), which we welcome. We do believe however that two key parts of the small business community continue to be largely overlooked – small company directors and the newly self-employed.
We would urge you to look again at what we believe are gaps and shortcomings in the current Government support schemes.
Self employed
Our previous letter to you highlighted a number of concerns for the self-employed.
Those who commenced in business after 5th April 2019 are not eligible for a grant under the SEISS. We believe that it is wrong to penalise those who have started to trade recently. We accept that it is more difficult to validate claims without a history of filing with HMRC, but there must be a way to support these individuals and their businesses in these difficult times.
We would therefore suggest that a simple one-off grant system is implemented for those who have commenced trading after 5th April 2019. We anticipate that this would be made available through the current SEISS portal.
Limited company directors
The challenges for director/owners of small companies have been well publicised. They do not qualify for the SEISS because they run their business as a limited company. They are also unlikely to qualify for the CJRS as they may not meet the strict ‘furlough’ criteria which apply. Even where a director does qualify for the CJRS, the amounts involved will often be minimal due to any claim being based solely on the salary they have taken from their limited company.
These are unprecedented times and UK business face exceptional challenges. We believe a solution is needed to help all struggling small business owners.
In a recent interview with Martin Lewis, Jim Harra indicated that the key reason dividend payments did not count toward grant support was because tax returns do not differentiate between dividends paid from an individual’s business and those arising from unrelated investments.
A possible solution to this problem would be to enable close company directors to claim a grant, linked to historic dividends. In line with the SEISS scheme, dividends could be considered over a period from 2016/17 to 2018/19, with an average monthly level calculated. As with SEISS, the grant could be 80% of the average monthly dividends, paid out in a single instalment covering three months, subject to the same limit of £50,000 average per year and capped at £7,500.
Alternatively, the CJRS scheme could be modified to allow the inclusion of dividend income to qualify for grant support where a director has been furloughed.
To address the issue of HMRC lacking data, we would propose a portal be created for authorised agents/accountants to supply the relevant limited company dividends to HMRC. Accountants have all this information to hand and details can easily be reconciled by HMRC back to previously submitted personal tax returns. In many cases this information will actually have been provided to HMRC as accountants will often attach a breakdown of income with the return.
Our profession stands ready to help support these small business owners and to provide you with all the details and breakdown you need to modify the current schemes.
Summary
In order for UK business to emerge from this crisis, we should again like to remind you of your commitment that ‘no one will be left behind’.
We urge you to consider the many business, families and jobs that continue to be at risk and to review your current support schemes to ensure that all small businesses receive the support they deserve.
Yours sincerely,
Daren Moore FCCA
On behalf of the Directors, franchisees and employees of the TaxAssist Group
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Last updated: 15th April 2024