Menu
Tax Notes logo

More Than 1 Million U.K. Self-Employed Claim HMRC Grant

Posted on May 18, 2020

U.K. taxpayers made 1.1 million claims for grants with a total value of £3.1 billion in the first two days of the self-employment income support scheme (SEISS), HM Revenue & Customs announced.

The tax authority’s May 15 update on Twitter followed a warning that tax agents attempting to apply for grants on behalf of clients adversely affected by the coronavirus crisis would trigger a fraud alert and would cause significant delays in payment. “We've been told by HMRC some agents are using their clients’ government gateway credentials to make SEISS claims on their behalf. Don’t do this!” the Chartered Institute of Taxation tweeted on May 14. HMRC's Twitter account said May 14, “Impacted clients will have to contact us separately to resolve” their issues.

Tax professionals pointed out that people who have not advised HMRC of a change of address may not receive information about the SEISS grant. “This includes people who are self-isolating at a different address to where they usually reside,” Victoria Todd, head of the CIOT’s Low Incomes Tax Reform Group, said in a May 12 release. “We are concerned that self-employed people whose businesses have been affected by the coronavirus may miss out on claiming this grant because they were not aware that it was available. It would be very unfortunate if business owners who have seen a fall in trade because of the lockdown or COVID-19-related health reasons do not get the financial help they are entitled to.”

Company Directors ‘Cut Adrift’

“Business owners who were self-employed but have recently incorporated (turned into a limited company) are not still self-employed,” the Low Incomes Tax Reform Group said in a May 14 release. The group has been contacted by people confused about the distinction between self-employment and running an owner-managed company, and is calling on HMRC to make it clear in SEISS guidance that “if you have your own company, which you work for, you are not self-employed.”

The group suggested that limited company owners, who are “usually employees of their own limited companies,” look to the coronavirus job retention scheme (CJRS) instead, “to the extent that they pay themselves a salary and meet the conditions of that scheme.” Those who do not qualify for any individual support may be eligible for welfare benefits, it added. Chancellor of the Exchequer Rishi Sunak announced on May 12 that the CJRS will remain open until the end of October.

Some commentators have suggested that Mel Stride, chair of the House of Commons Treasury Committee, caused some confusion by referring in recent evidence sessions to dividends arising from self-employment. In a May 12 release, Stride reiterated the argument that directors receiving dividends from their own companies were continuing to “fall through the gaps” in the government’s support measures.

Green Party member of Parliament Caroline Lucas asked Sunak on May 12 to consider “revising the self-employed scheme by including small business owners who take their income in dividends, as well as those who combine Pay As You Earn [employment income] with freelance work.” Edward Davey, acting leader of the Liberal Democrats, asked Sunak to “review his refusal to properly help those self-employed people who operate from limited companies and who have just been cut adrift.”

“The self-employment scheme in this country remains one of the most generous and comprehensive anywhere in the world,” Sunak replied. “It was designed to provide support to those people who have a different pattern of working. There is a difficulty in distinguishing the dividends that company directors earn from the dividends that anyone might earn through earning a passive share portfolio.”

The House of Lords Economic Affairs Committee is set to hold its annual evidence session with the chancellor on May 19. Likely questions include whether Sunak will “extend support to the self-employed” now that the CJRS has been extended, the committee said on May 15.

Job Retention Scheme Guidance

In a May 14 update, HMRC confirmed that by midnight on May 11 935,000 employers had made CJRS claims with a total value of £10.1 billion regarding 7.5 million furloughed jobs. HMRC will now provide weekly updates. The scheme opened on April 20.

HMRC also published on May 14 a guidance note for employers setting out which employees can be furloughed, and examples showing how to work out 80 percent of an employee’s normal wage as well as how much can be claimed regarding employer National Insurance contributions and pension contributions. Several guidance notes feature in a collection page published on May 15.

The Treasury Committee’s call for evidence on the economic impact of the coronavirus includes a series of questions on the CJRS and SEISS. Evidence is invited by May 27.

Tax Deferral

HMRC also published on May 15 guidance for taxpayers registered for self-assessment who are considering whether to defer their second payment on account of tax due for the 2019-2020 tax year. Taxpayers may choose to make payment by the normal due date of July 31 or choose to defer payment — without incurring an interest charge — until January 31, 2021, at the latest. HMRC reminded taxpayers that January 31, 2021, is also the due date for payment of any balancing payment due for 2019-2020 and the first payment on account for 2020-2021.

HMRC guidance updated on May 15 includes videos and webinars outlining the support available to businesses affected by COVID-19.

HMRC won the Tolley’s Taxation award for its “outstanding contribution to tax” in recognition of its response to COVID-19 at a virtual ceremony held on May 14. Andrew Hubbard, who chaired the judging panel, said HMRC had had to create new IT systems “within days” to deliver the support schemes.

Copy RID