Paul Scully MP Responds to Military in Business® Network

Paul Scully MP Q&A

Question 1) There are 2 bids in with Government right now that are being mulled over:
a. how to deal with owner-directors and
b. those excluded due to not having a 2019-20 tax return.

What is the progress and likely outcomes of these proposals?

The Government has acknowledged that it has not been possible to support everyone in the way they might have hoped. The Self-Employment Income Support Scheme (SEISS) was designed and implemented at extraordinary speed in order to meet the onset of the pandemic in as short a time as possible. The goal was for it to be open and accessible to as many people as possible, making use of existing processes and verifiable data to implement this rapidly while minimising the risk of fraud and error. 95% of those who are majority self-employed are eligible for the self-employment support grants.

Paid in Dividends

The Government worked with stakeholders and carefully considered the case for providing a new system for those who pay themselves through dividends. The practical issues that prevented us from being able to include company owner managers, namely, not being able to verify the source of their dividend income without introducing unacceptable fraud risk, still remain. After also assessing the ‘pay now, clawback later’ approach proposed by The Association of Independent Professionals and the Self-Employed (IPSE), the Government concluded that such an approach would involve a high risk that incorrect or fraudulent payments could not be recovered, ultimately at a cost to UK taxpayers. This was a difficult decision and it was taken for practical reasons.

2019-20 ‘newly’ self-employed

The Self-Employment Income Support Scheme (SEISS) relies on the information provided through tax returns to determine eligibility for the scheme and to calculate the grant amount. These returns are also used to protect the scheme from abuse by organised crime groups and fraudsters. When an individual applies to SEISS, HMRC can cross-check the person’s application against their tax returns for the years up to 2018-19. The Government has not been able to include people who became newly self-employed in 2019-20 in SEISS, as there is no historical record against which HMRC can verify applications.

The latest year for which HMRC have tax returns for all self-employed individuals is 2018/19. Further details on the fourth SEISS grant will be announced on 3 March. For those who do find themselves ineligible for the SEISS, they may still be eligible for other elements of the unprecedented package of support measures that have been made available by the Government during the current pandemic. Businesses and individuals can visit our checker took on GOV.UK at: www.gov.uk/coronavirus/business-support, to quickly and easily determine whether
they are eligible for any further financial support at this time. The Government will also continue to keep our support measures under review.

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