You are here: Home - Household Bills - News -

Directors demand Covid support for forgotten firms

0
Written by: Emma Lunn
23/11/2020
A coalition of professional bodies has proposed a way of assisting limited company directors excluded from financial support during the coronavirus pandemic.

Forgotten Ltd, the Association of Chartered Certified Accountants (ACCA), the Federation of Small Businesses (FSB), and a former senior advisor to the Office of Tax Simplification (OTS) have written to the Treasury to outline steps needed to help limited company directors.

The group warned that millions of jobs could be under threat unless urgent action is taken.

Company directors are one of the groups that has been left out of support offered to workers and self-employed people. About 3 million people have been excluded from any of the government’s Covid support schemes dispute many having no income since March.

The Treasury and HMRC have claimed that a support scheme for company directors would be impossible to establish because many pay themselves in dividends and there is “no way” to establish whether such income is derived from business activity or other investments.

But the group says a similar scheme to the Self Employment Income Support Scheme (SEISS), could be established by drawing on details regarding trading profits and remuneration submitted by business owners to Companies House. This information is already available to HMRC, largely through corporate tax returns.

Stressing the importance of companies to the UK’s economic recovery from, 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. In comparison, last month the National Audit Office (NAO) forecast the cost of government income support for employees to be £55bn.

The latest statistics from the Department for Business, Enterprise and Industrial Strategy (BEIS) state that there are just under one million non-employing companies across the UK and two million that are classed as micro-entities (employing 10 people or less).

Georgina Broadhurst, co-founder of ForgottenLtd, 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. The furlough scheme has supported their 7.5 million employees, but without financial support for the directors and the companies themselves, there will be no jobs for staff to return to by Spring. As a group of natural-problem solvers we embraced the challenge of finding a solution to the dividend issue and we hope the Treasury gives full consideration to our proposal.”

Mike Cherry, FSB national chairman, said: “For months now company directors – who have dutifully paid corporation and dividend taxation for years – have been told by the Treasury and HMRC that helping them falls into their too difficult box.

“Our fresh proposal demonstrates that, in fact, putting together a support scheme for directors in-line with what’s available to the self-employed is pretty straightforward – so much of the information needed is there in existing tax returns. 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.”

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

The savings accounts paying the most interest

It’s time to get your finances in shape, and moving your cash savings to a higher paying deal is a good plac...

Everything you need to know about being furloughed

Few people had heard of ‘furlough’ before March 2020, but the coronavirus pandemic thrust the idea of bein...

The experts’ guide to sorting out your personal finances in 2021

From opting to ‘low spend’ months to imposing your own ‘cooling-off period’, industry experts reveal t...

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

Having a baby and your finances: seven top tips

We’re guessing the Duchess of Cambridge won’t be fretting about maternity pay or whether she’ll still be...

Protecting family wealth: 10 tips for cutting inheritance tax

Inheritance tax - sometimes known as 'death tax' - can cause even more heartache for bereaved families. But th...

Travel insurance: Five tips to ensure a successful claim

Ahead of your summer holiday, it’s important to make sure you have the right level of travel cover or you co...

Money Tips of the Week