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MPs Told of ‘Devastating Cases’ of Gaps in COVID-19 Support

Posted on Jan. 22, 2021

Feedback from members of leading professional bodies on the impact on people’s lives of continued exclusion from government pandemic support schemes reflects the gravity of case studies shared by campaign groups, U.K. lawmakers heard.

Steve Baker, a Conservative member of Parliament and a member of the House of Commons Treasury Committee, asked a panel of tax and accountancy professionals to “give some characterization to just how serious being excluded has been in people’s financial lives.” For some people, “this will have been a financial calamity that will have changed the course of their lives,” he said during a January 20 hearing.

The government is under growing pressure to address the gaps in support provided by the self-employment income support scheme (SEISS) and the coronavirus job retention scheme. Chancellor of the Exchequer Rishi Sunak indicated during a January 11 debate on the economy that HM Treasury would examine in detail a proposed scheme to support company directors who have taken some of their income in the form of dividends.

“The case has been made eloquently by so many. . . . There are a huge number of case studies showing the impact of being excluded on people,” said Caroline Miskin, tax practitioner support manager at the Tax Faculty of the Institute of Chartered Accountants in England and Wales.

Tax professionals have worked exceedingly hard, sometimes free of charge, to help people obtain whatever support was available, Miskin said. The institute's members “do report back devastating cases which are similar to the ones that are very publicly expressed,” she added.

“Is it too late to help people, or is [it] time for ministers to change the schemes . . . or should we not raise false hopes?” Baker asked.

“Ultimately, that is a political decision,” Miskin responded. “The extent to which providing additional support now would retrieve the situation for some people, I’m not entirely sure, but one imagines that it would help a lot of people.”

Glenn Collins, head of technical advisory and policy at the Association of Chartered Certified Accountants, said the association’s members have seen continued stress and some major deterioration in well-being among some of those affected by gaps in support.

Noting that Treasury has argued that HM Revenue & Customs does not have sufficient information to close some of the gaps in support, committee Chair Mel Stride asked the witnesses what “additional room for maneuver” might be provided by information contained in tax returns submitted by the January 31 deadline.

HMRC’s anticipated receipt of up to 12 million self-assessment returns for the tax year 2019-2020 probably offers two opportunities to expand or refine the financial support available, said Richard Wild, head of the tax technical team at the Chartered Institute of Taxation.

The newly self-employed have been excluded from the SEISS. Eligibility could be extended to those who started self-employment in 2019-2020 and report their income on the 2019-2020 tax return, but “there are complexities and risks around doing that,” Wild said. Announcing an extension before January 31 could result in false returns being filed, so the scheme might be extended only to people who notified HMRC of their self-employment by the October 5, 2020, notification deadline, he suggested.

Secondly, for people who already qualify for the SEISS, 2019-2020 data might be used to refine the amounts payable, Wild said. The scheme as it stands is based on 80 percent of average profits over the three years up to 2018-2019, and “you may want to bring in 2019-2020 and drop off an earlier year, [for] a more up-to-date reflection of what the business has been generating,” he suggested.

“I agree. In principle, there is no reason why the 2019-2020 returns shouldn’t be taken into account when determining the conditions and eligibility for the fourth [SEISS] grant,” Miskin told the committee, adding that some risk assessment would be necessary, particularly for late-filed returns.

Extending the SEISS to those who started self-employment in 2019-2020 and changing the basis period for the grant could generate winners and losers, and some people might fail the £50,000 test or the 50 percent test, Miskin noted. To be eligible, self-employment income must be no more than £50,000 and must be at least equal to the amount of any other income.

Asked whether the support schemes could have been better targeted at the outset, Wild said the need for a fast rollout in March 2020 meant that some “hard edges” were inevitable. “It’s very difficult to be critical. The sense was that the schemes were going to be quite short-term,” he added.

The SEISS was launched for a three-month period, and it was extended for a second and final grant payable toward the late summer, Wild noted. “When you’re looking at a short period of time, it’s perhaps understandable, dare I say, to leave these gaps because you think they’re going to be fixed as we return to normal. But as we’ve carried on — and for some people, by the time we get to March and April, they’ll have been a year without support — I think it’s quite surprising that we haven’t done more to fill those gaps,” he added.

Treasury and HMRC were positive in their initial review of aspects of the proposed directors' income support scheme, Collins said.

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