Conclusions and recommendations
1.While we acknowledge that protection against fraud needs to be a key consideration in policy design, hundreds of thousands of individuals are suffering financial hardship through no fault of their own. Either their unfortunate timing in starting a new job, or their employer’s choice of timing in submitting paperwork to HMRC, will have made them ineligible to be furloughed and unable to claim support. (Paragraph 28)
2.We urge the Government to find a way to extend eligibility criteria to all new starters, perhaps by further extending the cut-off date to 31 March, or widening access by accepting alternative forms of evidence that can demonstrate an individual’s employment, such as a signed contract of employment. (Paragraph 29)
3.While the Committee recognises the importance of allocating financial support to those who earn the least, the design of the SEISS means that hundreds of thousands of people are potentially suffering financial hardship because of the arbitrary £50,000 cut-off that has no equivalent in the job retention support scheme. We are not suggesting that the Government rolls out blanket support to all but it cannot be right to have a system where, in one household, a self-employed single-parent earning just above the cap receives nothing while next door, a couple, either both self-employed and earning profits below the cap, or salaried employees with full entitlement to CJRS receive up to £5,000 a month. (Paragraph 36)
4.The Government must tackle the cliff edge that exists in the design of the SEISS by removing the £50,000 cap and allowing those with profits just over this cap access to some financial support, up to the total monthly support cap of £2,500 (as for salaried employees). (Paragraph 37)
5.The Government has acknowledged the issue of hundreds of thousands of limited company directors missing out on support but has so far failed to take any action. Many of these individuals, who have a key role to play in firing up the economy again, are facing significant financial hardship. (Paragraph 45)
6.The Government must find a practical solution to supporting hundreds of thousands of limited company directors who are missing out on support because they pay themselves in dividends. IPSE has presented the Treasury with a ready-made solution whereby HMRC would request additional information about the proportion of dividends that have come from company profits and from other sources and require self-certification by the applicant. HMRC would reserve the right to investigate claims and, if it was later found that applicants had inflated their figures, HMRC would reclaim the support with penalties. While we recognise that this approach may require significant resources, we urge the Government to accept and implement this proposal. While it will have immediate cost implications, it could mitigate future economic scarring and safeguard future tax revenues. (Paragraph 46)
7.It cannot be right that distinct groups of individuals fail to benefit from the Government’s principal support schemes when the shutdown has taken away their livelihoods overnight through no fault of their own. (Paragraph 52)
8.We call on the Government to recognise the impact of the coronavirus on PAYE freelance workers and establish a system of support which ensures that this group of people can access financial support during the crisis. We recommend it gives this group access to financial support that equates to 80 per cent of their average monthly income earned in the first 11 months of the 2019–20 tax year, based on their PAYE tax record in year. This support should be available up to a total of £2,500 per month (as for salaried employees). (Paragraph 53)
9.The Government needs to quickly find a way of supporting the many people who have started a new business, or built their business up in the last year, but are unable to qualify for support because they cannot fulfil the eligibility criteria required by the SEISS. (Paragraph 58)
10.The Committee recognises the challenges of offering support to those who need it while implementing the safeguards required to mitigate the very real risk of fraudulent claims for support. However, we encourage the Government to undertake an urgent review to see how it can extend support to those newly self-employed who are unable to benefit from the SEISS. (Paragraph 59)
11.The Government must amend the CJRS to allow tronc payments made via PAYE to be included when calculating worker’s pay when assessing entitlement. (Paragraph 61)
12.When challenged about gaps in support the Chancellor has often cited the administrative difficulties in addressing issues given the speed with which he has to act. However, he has now extended the schemes and therefore has more time to tackle these complexities. (Paragraph 65)
13.The Government must adapt its existing schemes or develop new support mechanisms to help these people if it is to completely fulfil its promise of doing whatever it takes to protect people and businesses from the impact of the pandemic. The Chancellor has indicated that he may, in future, reform the tax arrangements for self-employed people, in part justifying this on the basis of the Government’s fair treatment now of those self-employed people affected by the crisis. Any lack of fairness in these support schemes may undermine this. (Paragraph 66)
Published: 15 June 2020