Source · Select Committees · Public Accounts Committee
Recommendation 15
15
Two further groups that were largely excluded from support were freelancers and owner-managers of companies.
Conclusion
Two further groups that were largely excluded from support were freelancers and owner-managers of companies. Freelancers generally have short-term contracts with employers and as a result many might not have been on a company’s PAYE system at the cut-off point for furlough. HM Treasury said that was aware of the issues, but that the lack of data held by HMRC and the fact that the tax system wasn’t designed to regularly capture information on such people made it particularly difficult to bring freelancers into the scheme. Some 0.4 million freelancers may have missed out on support from the 32 C&AG’s Report, para 14 33 Qq 73, 79 34 Public Accounts Committee, Oral Evidence: HM Revenue & Customs 2019–20 Standard Report, HC 690, Q 13 35 Qq 73–75, C&AG’s Report paras 2.9–2.10 14 Covid-19: Support for jobs first schemes.36 We also asked about owner-managers of companies who may have been excluded. HMRC explained that owner-managers qualify for the furlough scheme to the extent that they pay themselves through their PAYE system. It acknowledged that many owner-managers opted to pay themselves a small amount in this way, and rely predominantly on dividend income. HMRC maintained, however, that the schemes were not aimed at supporting investors for the loss of dividend income and that it did not hold sufficient information from tax return data to be able to distinguish between what is investment income and what is income in lieu of salary. We asked HMRC whether other sources of government data could be used to verify the eligibility for the schemes from those groups currently excluded; for example, information held by Companies House might distinguish between different types of dividend income. It said that this was something it had looked at closely over the years from a tax perspective but had not found a way of distinguishing between the different types of dividend income.37 Changes to the schemes created uncertainty
Government Response
Not Addressed
HM Government
Not Addressed
3: PAC conclusion: The Departments have not done enough to reduce the number of people excluded from the schemes. 3: PAC recommendation: HM Treasury and HMRC should investigate whether more data within and outside of the tax system could be used to determine eligibility for currently excluded groups and write to the committee within six weeks to explain their findings. HM Treasury and HM Revenue and Customs should liaise with departments which have a detailed knowledge of the affected sectors in order to improve access to Covid-19 related support schemes for currently excluded groups. 3.1 The government agrees with the Committee’s recommendation. Recommendation implemented 3.2 People may be ineligible for the Coronavirus Job Retention Scheme (CJRS) or the Self-Employment Income Support Scheme (SEISS) due to either policy choices or administrative constraints. On the latter, throughout the pandemic, the departments have 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, both schemes were based around using information that HMRC already held and could therefore verify. 3.3 As the schemes have evolved, the two departments have been able to extend support to more people; for example, moving the payroll cut-off date for CJRS, and supporting new parents and reservists. Those unable to access support via CJRS or SEISS may be able to benefit from other measures, including funding given to local authorities. 3.4 The HMRC and HM Treasury 10-year Tax Administration Strategy sets out the departments’ commitments to develop a fully digital tax system that works closer to real time. This includes extending 27 MTD and increasing use of real-time information to give customers and HMRC a more up-to-date understanding of and certainty over a customer’s position. 3.5 The government continues to explore, and discuss with stakeholders, options for best supporting those affected by COVID 19.