Sunday, January 17, 2021

Business leaders draw-up fresh proposal to help forgotten companies

A coalition of small business leaders, tax experts and company directors have mapped out the measures needed to address a government shortcoming which has left thousands with no income support throughout months of Covid-linked disruption.

Many of those classified as self-employed by the Government have been able to claim grants covering the significant majority of their incomes if they’ve been impacted by restrictions since the Spring, and can continue to do so until April 2021.

By contrast, the Treasury and HMRC have stated that a comparable scheme for company directors would be impossible to establish because many pay themselves in dividends and there is “no way” to establish whether such income is derived from business activity or other investments.

ForgottenLtd, Re Legal Consulting Ltd, FSB and ACCA state in their letter to the Treasury that a Directors Income Support Scheme (DISS), founded on the principles underpinning the Self-Employment Income Support Scheme, could be established by drawing on details regarding trading profits and remuneration submitted by business owners to companies house – largely through corporate tax returns – information that is already available to HMRC.

Stressing the importance of companies to the UK’s economic recovery from, the groups warn that “hundreds of thousands have suffered severe financial hardship, and are now at serious risk of closure. Up to 7.5 million of their employees are at risk of unemployment.”

They add that, without immediate assistance, “we will see fewer businesses in existence, and fewer jobs – these cannot be furloughed, as they won’t exist anymore.”

The collective forecasts that the cost of its proposed scheme would be between £2bn and £6bn, depending on its scope. Last month, the National Audit Office (NAO) forecast the cost of government income support for employees to be £55bn.

The latest statistics from the Department for Business, Enterprise and Industrial Strategy (BEIS) state that there are just under one million non-employing companies across the UK and two million that are classed as micro-entities (employing 10 people or less).

Rebecca Seeley Harris of Re Legal Consulting Ltd, and a former Senior Advisor to the OTS, said: “This initiative shows how resourceful and creative small company directors are and they are the life blood of the UK economy. The government should be getting behind us by bringing in DISS to provide support at this critical time.”

Co-Founder of ForgottenLtd Georgina Broadhurst said: “The ForgottenLtd Campaign represents hundreds of thousands of hard-working, tenacious small business owners across the UK, who are currently looking down the barrel of a gun. After 8 months without meaningful support many businesses are on the brink of collapse or insolvency.

“Directors have found themselves having to take on debt or spend their life savings to stay afloat. The furlough scheme has supported their 7.5 million employees, but without financial support for the directors and the companies themselves, there will be no jobs for staff to return to by Spring.

“As a group of natural-problem solvers we embraced the challenge of finding a solution to the dividend issue and we hope the Treasury gives full consideration to our proposal.”

Head of ACCA UK Claire Bennison said: “We appreciate the challenges that the government is managing at this time, however, we have come together in partnership to find a workable solution to save jobs, and to level up the playing field. These local businesses are the ones who will play a significant part in our economic recovery and they deserve to be treated equally.”

FSB National Chairman Mike Cherry said: “For months now company directors – who have dutifully paid corporation and dividend taxation for years – have been told by the Treasury and HMRC that helping them falls into their too difficult box.

“Our fresh proposal demonstrates that, in fact, putting together a support scheme for directors in-line with what’s available to the self-employed is pretty straightforward – so much of the information needed is there in existing tax returns.

“These individuals are not statistics on a spreadsheet, they are real people with bills to pay and families to feed. It’s high time this Government – which claims to be pro-enterprise – helps them.”

A message from the Editor:

Thank you for reading this story on our news site - please take a moment to read this important message:

As you know, our aim is to bring you, the reader, an editorially led news site and magazine but journalism costs money and we rely on advertising, print and digital revenues to help to support them.

With the Covid-19 pandemic having a major impact on our industry as a whole, the advertising revenues we normally receive, which helps us cover the cost of our journalists and this website, have been drastically affected.

As such we need your help. If you can support our news sites/magazines with either a small donation of even £1, or a subscription to our magazine, which costs just £33.60 per year, (inc p&P and mailed direct to your door) your generosity will help us weather the storm and continue in our quest to deliver quality journalism.

As a subscriber, you will have unlimited access to our web site and magazine. You'll also be offered VIP invitations to our events, preferential rates to all our awards and get access to exclusive newsletters and content.

Just click here to subscribe and in the meantime may I wish you the very best.






Latest news

Derby recruitment firm to open three new offices

Sky Recruitment Solutions is to open three new UK offices following a “phenomenal” growth in turnover and staff numbers during 2020. The company, based in...

Supreme Court rules in favour of small business claims against commercial insurers

In good news for small firms, a Supreme Court ruling will see thousands have their disputed COVID-19 business interruption claims paid. It is expected that these...

New warehousing facility set for the East Midlands as Mars looks to reduce logistics carbon footprint

A new, multi-year partnership between Mars and DHL will see the construction of two state of the art warehousing facilities and the creation of...

Preventative healthcare specialist completes double acquisition of Lincs companies

Preventative healthcare specialist PAM Group has completed a double acquisition as it continues its buy-and-build strategy. The Warrington-based group has bought 66Fit and Physio Supplies...

Private equity fund swoops for Corby fruit supplier

Elaghmore, the UK Private Equity fund, has acquired Corby-based Orchard House Foods Ltd, the suppliers of prepared fruit, fresh fruit drinks and desserts, from...

Related news

Two tenants secure premises at Lutterworth business park

Two new tenants have secured premises at Cosford Business Park in Lutterworth. Wells McFarlane has recently completed two transactions which will see expansion for Deacons Martial...

Derby recruitment firm to open three new offices

Sky Recruitment Solutions is to open three new UK offices following a “phenomenal” growth in turnover and staff numbers during 2020. The company, based in...

Supreme Court rules in favour of small business claims against commercial insurers

In good news for small firms, a Supreme Court ruling will see thousands have their disputed COVID-19 business interruption claims paid. It is expected that these...

New warehousing facility set for the East Midlands as Mars looks to reduce logistics carbon footprint

A new, multi-year partnership between Mars and DHL will see the construction of two state of the art warehousing facilities and the creation of...

By continuing to use the site, you agree to the use of cookies. more information

The cookie settings on this website are set to "allow cookies" to give you the best browsing experience possible. If you continue to use this website without changing your cookie settings or you click "Accept" below then you are consenting to this.

Close