HMRC Required to Urgently Explain Why Some Taxpayers Received Zero COVID-19 Financial Support

The Public Accounts Committee has today (20 January 2021) issued a report which calls on HMRC to urgently explain why it can’t help those freelancers and other groups that have been excluded from receiving any COVID-19 financial support from the government.  The report acknowledges from £80 billion has been provided in support to businesses and individuals, but despite this quirks in the tax system have left groups of taxpayers without any financial support, despite lockdowns and tier restrictions meaning that some cannot work at all.

According to the Public Accounts Committee, some freelancers, with verifiable employment and tax records visible to HMRC, may have been excluded from the Coronavirus Job Retention Scheme (CJRS).  In some sectors, such as the creative industries, it is common for freelancers to work on a series of short-term employment contracts with gaps in between. HMRC maintains that it has been as flexible as possible, for example, by allowing, for the purpose of eligibility to the COVID-19 support schemes, the extension of short-term contracts and rehiring of employees who were made redundant. Meanwhile, some large companies that have received support from government during the COVID-19 crisis have continued to pay out dividends and high executive salaries.

The report recommends that HMRC should, within six weeks:

  • publish an explanation for the reasons why it cannot help those freelancers and other groups that have been excluded from receiving any support and what would be required to determine eligibility for financial support for that group of taxpayers; and
  • consider the support it can provide for those taxpayers that have, due to the IR35 rules, moved onto payrolls and missed out on support from the COVID schemes, for example, by reviewing whether it can use an average of wages in the past three years to determine grants.

There has been increasing pressure from various campaign groups which have been relentless in seeking media opportunities to publicise their plight and they have successfully gained the support of numerous MPs and metro mayors.  It is unthinkable that some people have had zero financial support for 10 months now, and also that the Chancellor and policymakers are aware of this yet consistently fail to address the problem.  Let’s hope that the influential Public Accounts Committee will be the catalyst needed for equitable support measures to be implemented.

You can read the full report here

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