Source · Select Committees · Public Accounts Committee
Recommendation 10
10
Accepted
In December 2020 we reported that an estimated 1.1 million people were excluded from the...
Conclusion
In December 2020 we reported that an estimated 1.1 million people were excluded from the initial phases of CJRS because HMRC did not have sufficient data to verify claims. These people comprised 0.7 million limited company directors who took their income as dividends and 0.4 million short-term or freelancer workers missing payroll. Limited company directors qualified for the furlough scheme to the extent that they paid themselves through their PAYE system. However, as HMRC acknowledged in 2020, many limited company directors opted to pay themselves a small amount in this way, and rely predominantly on dividend income.14 We received written evidence from the Association of Independent Professionals and the Self-Employed, which told us that it had presented to HM Treasury alternative proposals for how limited company directors could have been supported, but the schemes were not extended to this group.15 In December 2020 we also reported that 0.2 million newly self-employed people missed out on the first three SEISS grants because HMRC did not hold enough data about their self-employment. We recommended that the Departments should investigate whether more data within and outside of the tax system could be used to determine eligibility for currently excluded groups. The Departments responded by saying they had to balance the desire to provide support to as many people as possible, as quickly as possible, with the need to protect public funds from error and fraud. To strike this balance, they said both schemes were 12 Qq 5, 8: Office of National Statistics, Movements out of work for those aged over 50 years since the start of the coronavirus pandemic, March 2022, https://www.ons.gov.uk/ employmentandlabourmarket/peopleinwork/employmentandemployeetypes/articles/ movementsoutofworkforthoseagedover50yearssincethestartofthecoronaviruspandemic/2022–03–14, (accessed 1 December 2022) 13 Qq 49, 112–114 14 Committee of Public Accounts, Covid-19: Support for jobs, paras 13, 15; C&
Government Response Summary
The government agrees with the committee's recommendation and has consulted on options for improving the range of data HMRC collects, uses and shares, including collecting data on employee hours worked, dividends received, and start and end dates of self-employment, with implementation planned from April 2024.
Government Response
Accepted
HM Government
Accepted
2: PAC conclusion: Gaps and lags in HMRC’s data contributed to the schemes providing excessive support to some, while others in need were ineligible. 2: PAC recommendation: The Departments should set out, by July 2023, their priorities for obtaining data which would enable the better targeting of economic support. In doing so, they should consider how they can keep burdens on customers proportionate. 2.1 The government agrees with the Committee’s recommendation. Recommendation implemented 2.2 From July to October 2022, the government consulted on options for improving the range of data HMRC collects, uses and responsibly shares across government, to provide an accurate and up to date picture of citizens and businesses. Some options were focused on specific customer groups, such as the self-employed, whilst others proposed collecting a particular piece of information across different customer groups (e.g., occupation). 2.3 Following careful consideration of the views of respondents to the consultation, the government published a response on 27 April 2023. This set out a measured and proportionate approach to prioritising the collection of data that customers already hold, 17 including specific options that will be taken forward in a future Finance Bill with the intention to collect this data from April 2024. 2.4 The government will prioritise three options: collection of data on employee hours worked via Real Time Information PAYE reporting, dividends received from owner-managed businesses via the Self-Assessment return and start and end dates of self-employment, as set out in the consultation. The government also previously set out plans for the introduction of Making Tax Digital for Income Tax, which will provide a more up-to-date data picture of the income and expenditure levels of self-employed customers with a qualifying income of more than £50,000 per annum from 2026 and £30,000 from 2027, through quarterly updates. 2.5 The government will continue to review the data it collects to ensure future policy measures requiring economic support are effectively targeted whilst also balancing the cost of collection.