Thousands need support
Coalition demands help for ‘forgotten firms’
Mike Cherry: ‘high time the government provided help’
A coalition of small business leaders, tax experts and company directors have demanded the government plug shortcomings in support which have left thousands with no income support throughout months of Covid-linked disruption.
Many of those classified as self-employed by the Government have been able to claim grants covering the significant majority of their incomes if they’ve been impacted by restrictions since the Spring, and can continue to do so until April 2021.
By contrast, the Treasury and HMRC have stated that a comparable scheme for company directors would be impossible to establish because many pay themselves in dividends that it is difficult to establish whether such income is derived from business activity or other investments.
ForgottenLtd, Re Legal Consulting Ltd, FSB and ACCA state in their letter to the Treasury that a Directors Income Support Scheme (DISS), founded on the principles underpinning the Self-Employment Income Support Scheme, could be established by drawing on details regarding trading profits and remuneration submitted by business owners to Companies House – largely through corporate tax returns – information that is already available to HMRC.
The groups warn that “hundreds of thousands have suffered severe financial hardship, and are now at serious risk of closure. Up to 7.5 million of their employees are at risk of unemployment.”
They add that, without immediate assistance, “we will see fewer businesses in existence, and fewer jobs – these cannot be furloughed, as they won’t exist anymore.”
The collective forecasts that the cost of its proposed scheme would be between £2bn and £6bn, depending on its scope. Last month, the National Audit Office (NAO) forecast the cost of government income support for employees to be £55bn.
Co-Founder of ForgottenLtd Georgina Broadhurst said: “The ForgottenLtd Campaign represents hundreds of thousands of hard-working, tenacious small business owners across the UK, who are currently looking down the barrel of a gun.
“After eight months without meaningful support many businesses are on the brink of collapse or insolvency. Directors have found themselves having to take on debt or spend their life savings to stay afloat.
“We embraced the challenge of finding a solution to the dividend issue and we hope the Treasury gives full consideration to our proposal.”
FSB National Chairman Mike Cherry said: “These individuals are not statistics on a spreadsheet, they are real people with bills to pay and families to feed.
“It’s high time this Government – which claims to be pro-enterprise – helps them.”