That The Chancellor disputes that some three million people, self-employed, sole traders, freelancers and owners and directors of SME’s, have fallen through HMG’s support gaps, which we must acknowledge have been unprecedented, does neither him nor HMG any credit. His reported reluctance to even engage with groups such as Forgotten Ltd and initiatives like ‘Directors Income Support Scheme’ (DISS), simply compound the shame he should bear.
It is simply unacceptable that peoples’ lives have been so devastatingly affected in a country like Great Britain which supposedly prides itself on supporting those who are most vulnerable and fall through the gaps in ‘normal’ times, let alone in these darkest hours in living memory, for most of us as a nation.
Nor is it just the business ‘lives’ of self-employed, sole traders, freelancers and owners and directors of SME’s, but the impact on their and their families, and friends, personal lives, as well as the associated stress and mental health; as well as the reciprocal knock on to the wider communities and economy,
It is important to acknowledge that HMG and The Treasury have indeed taken unprecedent steps to support UK business and SME’s, through such as the furlough and SEISS schemes. The reality is though that for almost three million people, self-employed, sole traders, freelancers and owners and directors of SME’s have not had any help or support at all, some for eight months, and have fallen through the support gaps. Let us not forget, these self-employed, sole traders, freelancers and owners and directors of SME’s are taxpayers!
So why? Is it a lack of political and financial will? Or perhaps a poorly thought out series of policies and rules whereby people are penalised by technicalities and rules which do not cater to the unique requirements of self-employed, sole traders, freelancers and owners and directors of SME’s? Or is it just a lack of imagination, understanding and proper planning and thought? Perhaps most tragic of all are those brave souls who took the plunge to become self-employed, sole traders, freelancers and owners and directors of SME’s just before the March 2020 lockdown.
So, what are the options available for sole traders, freelancers and owners and directors of SME’s; and are they realistically able to support not just individuals, but allow businesses, especially micro, small, SME and family firms, to survive?
In theory, there is the SEISS scheme, 12 months interest free loans, furlough, and ultimately universal credit, but some three million self-employed, sole traders, freelancers and owners and directors of SME’s are falling between the gaps, illegible for any of the above four, or indeed other, support schemes. Even when individuals, may be eligible, there are potential restrictions. How, for examples, are loans to be paid back, and how can one keep a firm alive on UC, which can barely cover rent and food on the table? And arguments made by HMG about dividends for example, simply do not cut the mustard.
There is also shameful, immoral and unethical manipulation going on, in which eats away at and squanders vital financial support resources which could be deployed elsewhere. For example, furlough ‘jobs’ are being advertised, and in sectors being hardest hit, like the creative sector, senior furloughed personnel being employed for free and in doing so, are taking much needed work from freelance creatives.
Neither individuals not firms want a free pass, simply justice, support for which, as individual and business taxpayers they should be unquestionably eligible for, and some innovative thinking to provide short an medium term solutions to the issues and challenges faced.
So, what needs to be done? Firstly, HMG and The Chancellor must immediately engage with those who are being forgotten. Secondly, support must be provided, in whatever guise is most fit for purpose, ranging from the eligibility criteria for SEISS and access to grants being reviewed, through flexibility of financial accounting and reporting, to speed of payments out. Alongside this, payment holidays along with hardship funds and enhanced UC support would all be welcome.
Many of these sole traders, freelancers and owners and directors of SME’s who are falling through the gaps are in their 50’s and 60’s, who for various reasons have ‘portfolio’ careers. For them and their families the current situation can be particularly scary. For many of these, with decades of employment and taxes paid behind them, they find that they are ineligible for any support now.
Whilst sole traders cam claim a potential grant equal, directors of SME’s paid through dividends, cannot claim, which seems perverse, and insult is added to injury when such directors are portrayed as dodging tax and not contributing to the wider ‘tax’ and economic frameworks; which seems somewhat perverse when such SME’s and directors pay corporation tax, dividend tax, VAT, employers’ NI and salaries! The whole situation is made even worse for directors, who can get no support unless they decide to furlough any PAYE elements of their pay, but this has an impact on conducting their statutory duties as a director. Ultimately, if firms fail, then furlough fails!
And there seem to be systemic unfairness and disparities. Why will a sole trader, or indeed a director, earning £50,001 not be eligible for help, but those earning substantially more can receive furlough support?
IR35 and liability worries compounded this scenario even more. Many big firms insist that their contractors and freelancers operate via limited companies, and many many such ‘directors’ earn less than £50,000 a year, from the creative industry to plumbers, carpenters, electricians and consultants
The danger in all of this is that SME’s are the backbone of the UK economy, with nearly six million firms accounting for 99.9% of the business population. So, if our sole trader, freelancer SME’s community feels like it is being hung out to dry by HMG, then the implications are serious for the UK. Why would anyone aspire to work for themselves if the risks are untenable and being paid as an employee offers so much more protection in a volatile and disruptive world?
In conclusion, none of this is unresolvable. Remembering that HMG and HMRC are playing with peoples lives here, a wee spot of common sense, flexibility, imagination and a sense of honour and decency is required. Financially, this is perfectly possible, and the additional costs involved will be but a drop in the ocean of what has been spent, will continue to be spent, and would need to be spent if the worst case mas unemployment and associated costs were to occur through a lack of support and help now. HMG and The Chancellor must, now, engage with such as Directors Income Support Scheme and Forgotten Ltd.
The reality is that too many sole traders, freelancers and owners and directors of SME’s are particularly vulnerable to the impact of this current crisis and falling through the gaps, and they must not be failed.