Select committee: Treasury Committee

Conclusion 5

2nd Report - Economic impact of coronavirus: Gaps in support Published 15 Jun 2020 Paragraph 45 Addressed to HM Treasury

Treasury Committee Economic impact of coronavirus All items in this report Report on parliament.uk ↗ Inquiry on parliament.uk ↗

Conclusion (the committee's words)

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.

From: Treasury Committee, 2nd Report - Economic impact of coronavirus: Gaps in support (HC 454), paragraph 45, 15 June 2020

Government response

Fourth Special Report - Economic impact of coronavirus: Gaps in support: Further Government Response

The government responded to the whole report on 4 September 2020 (deadline 15 August 2020).

Summary written by Accountability Index from the government's response. It is not the government's own words.

The government's further response sets out reasons why the Coronavirus Job Retention Scheme (CJRS) and the Self-Employment Income Support Scheme (SEISS) have the eligibility limits the Committee identified, while noting amendments already made and wider support available.

On the 19 March cut-off for CJRS eligibility, the government states it was chosen as "the day before the CJRS was announced", and says extending it would "significantly increase the risk of abuse" because claims could not be verified against fraud.
On dividends, the government says it "carefully considered the case" for a new system, but states that such support is "much more complex" and that HMRC could not efficiently or consistently verify claims.
On SEISS, it states the scheme is based on trading profits, and that using 2019-20 tax returns for those who started trading more recently would carry fraud risks: "The Government cannot expose the Exchequer to these risks."
It reports changes made: from 1 July furloughed employees can return for any amount of time and shift pattern, and SEISS eligibility has been amended to cover self-employed new parents.

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Third Special Report - Economic impact of coronavirus: Gaps in support: Government Response to the Committee’s Second Report of Session 2019–21

Published 23 July 2020.

Summary written by Accountability Index from the government's response. It is not the government's own words.

The Chancellor says the Government has "adapted the CJRS and SEISS as far as is possible", and does not extend them to the newly self-employed, those paid via dividends or those hired after 19 March, citing fraud risk and practical constraints.

On the newly self-employed, the Chancellor says it "would not be possible to include those who began trading after the 2018–19 tax year", because accepting 2019–20 returns creates an opportunity to "file fake or misleading returns".
On those paid through dividends, the Government "will not be able to provide" a new system for practical reasons, and says IPSE's "pay now, clawback later" proposal would be "highly resource-intensive".
On the CJRS cut-off date, it says it is "unable to extend this date any further" beyond 19 March, citing the practical implications of monitoring and the risk of fraud. It also states that discretionary tronc payments cannot be included in CJRS calculations, while non-discretionary ones are.
The Government says the CJRS and SEISS "were the right policies for the first phase of the crisis" and points to its Plan for Jobs, making available "up to £30bn" ahead of the Budget and Spending Review.

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