Rishi Sunak urged unbiased enterprise leaders to assist
Originally written by Timothy Adler about small business
Lobbyists, trade associations and experts have come together to urge Rishi Sunak to help the company’s directors who have frozen out of state Covid-19 support.
A consortium of professional associations has asked the Chancellor to consider proposals for a Directors Income Support Scheme (DISS), which mirrors the Self-Employment Income Support Scheme (SEISS), under which sole proprietorships can claim up to £ 2,500 per month.
This is a final attempt for the Treasury Department to change its mind ahead of this week’s spending review.
> See also: When and where do you apply for the new 80% self-employment allowance?
So far, the Treasury Department has declined to help self-employed directors of limited liability companies who distribute themselves in dividends, claiming it is too difficult to separate corporate income from passive income such as property and stocks.
This is despite the fact that the company’s directors pay off in dividends. This is the standard accounting structure used by around 2 million small limited companies in the UK. These range from single-owner directors to micro-businesses that together employ 7.5 million people.
Some see the Treasury’s mulishness as a veiled attack by the HMRC on self-employed business leaders who often pay less into national insurance and pay corporate tax instead of income tax.
It is estimated that around 780,000 self-employed business leaders have not been blinded by any government funding from Covid-19.
> See also: The Self-Employed Income Support Scheme (SEISS) is to be doubled for November
Advocacy Group ForgottenLtd, Re Legal Consulting Ltd, the Association of Small Businesses (FSB), and the Association of Accountants (ACCA) wrote to the Treasury Department that a DISS could be set up using details of trade profits and compensation submitted by Entrepreneurs to Companies House – mainly through corporate tax returns – information already available to HMRC.
With a cap of £ 2,500 per month, the taxable grants would be paid to the company and not to individuals, which the FSB said would minimize the risk of fraud. Real estate and investment companies would not be eligible.
The collective predicts that the proposed system will cost between £ 2 billion and £ 6 billion, depending on the scale, putting it on par with the SEISS system, which cost around £ 7 billion in the first three months of operation.
Georgina Broadhurst, co-founder of ForgottenLtd, said, “After eight months without meaningful support, many companies are on the verge of collapse or bankruptcy. Directors had to borrow or spend their savings to stay afloat. The vacation program has supported their 7.5 million employees, but without financial support to the directors and the companies themselves, there will be no jobs for the employees to return to by spring. “
FSB National Chairman Mike Cherry added, “For months now, corporate executives who have dutifully paid corporate and dividend taxes to the Treasury and HMRC have been telling them that it is too difficult for them to help. Our new proposal shows that it is indeed quite easy to put together a director support program in line with the self-employed opportunities available – so much of the information you need is on existing tax returns. These people are not statistics in a table – they are real people paying bills and feeding families. It is high time this government – which claims to be business friendly – helps them. “
Last week the Labor Mayors of three of England’s largest cities – London, Manchester and Liverpool – wrote to Rishi Sunak asking him to revisit the whole issue of the 3 million excluded from Covid-19 support, including company managers, PAYE freelancers and the recently self-employed.
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Rishi Sunak urged independent business leaders to help