Letter to the Chancellor about a Directors Income Support Scheme

The Rt Hon Rishi Sunak MP 

Chancellor of the Exchequer

8th January 2021

 

Dear Rishi,

I am writing as the Co-Chair and on behalf of the APPG on Gaps in Support, to urge you to consider setting up a Directors Income Support Scheme.

The Treasury’s swift execution of  financial support during the pandemic has saved the livelihoods of millions of people, employed and self-employed alike. However, it is perhaps inevitable that such a rapid rollout, in response to an unprecedented crisis, would inadvertently exclude some groups.

The largest of these groups is directors of limited companies. They fall between the categories of employed and self-employed, and therefore do not receive adequate support from either the Coronavirus Job Retention Scheme or the Self-Employment Income Support Scheme. This group makes up more than two thirds of individuals estimated to have been excluded from Government support, yet is routinely ignored and misrepresented as “self-employed”, or even as fraudulent.

These are entrepreneurial self-starters who have been encouraged to set up company structures, or demanded to do so in order to secure contracts from their clients - they have not done this to avoid paying tax. In fact they pay corporation tax within the company on top of income tax when that reaches the individuals.   Moreover, as companies their taxes are tightly regulated and constantly scrutinised.

The Directors Income Support Scheme (DISS) has been developed to provide the Government with a viable method of support for these individuals. I believe you have received a briefing on the details of the scheme already.

This policy proposal was created by a coalition of ForgottenLtd, Rebecca Seeley Harris, a former Senior Policy Adviser to the Office of Tax Simplification, the ACCA and the Federation of Small Businesses. The DISS would run on the same parameters as the SEISS and would be no more onerous to implement. The DISS would not be open to fraud any more than the SEISS, as trading profits of limited companies are contained in their corporation tax return and directors can self-certify verifications. The DISS model, based on SEISS, would potentially support the directors of up to 2 million small or micro-companies within its scope.

To date, these individuals have been excluded through a quirk in the tax system – they are simply asking for parity with their fellow tax-paying citizens. Amending this accidental exclusion through the DISS would be relatively simple. All that is required is the political will to do so from the Treasury and HMRC. 

I urge you to sincerely consider this proposal, and to maintain a regular dialogue with the Gaps in Support APPG about realistic, targeted policy proposals which aim to rectify the gaps in the Government's coronavirus financial support schemes. 

Yours sincerely, 

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