The Treasury Committee has criticised the taxman over the government’s support for the self-employed, raising issues over the fairness and timeliness of the regime.
In a committee meeting this morning (April 8), Jim Harra, chief executive of HMRC, said the agency intended to contact the 3.8m people eligible to use the government’s self-employed furlough scheme by mid-May to invite them to claim online with payments made by early June.
But Rushanara Ali, member of parliament for Bethnal Green and Bow, said this was a “shocking revelation”.
Ms Ali added: “We have a lot of people who will have to live on savings or if they do not have savings — which many self-employed people do not — then they will be in real difficulty.
“Many people would have already submitted all the information you need and have filed their tax return by the January deadline. Why will no one receive money until early June?”
The government gave self-employed people until April 23 to submit their tax return so they could be eligible for the scheme, which pays up to 80 per cent of earnings, but many would have already filed their return earlier this year.
The scheme — which was announced last month (March 26) — will be available to all majority self-employed workers with trading profits of up to £50,000 a year and it is expected to cover 95 per cent of the country's self-employed workforce.
Mr Harra said: “I appreciate people need this money as quickly as we can possibly get it to them. There are other safety nets for people in need, like the welfare system.
“If we can make the payments earlier, we definitely will. But mid-May is likely for when people will be able to claim.”
The HMRC top boss said there were a number of steps the department had to go through to pay the money and that establishing which workers were applying for the scheme and collecting their bank details were the main hold ups.
He said: “We have the data to calculate most people’s entitlement, but we need them to say whether they wish to claim as it's only open to those affected and we will need their bank details.”
Ms Ali also raised concerns about the fairness of the regime for single workers compared to households.
Ms Ali said households with two incomes of just less than £50,000 would get two times the support, while a single income of just over £50,000 would get nothing. She asked: “Is this appropriate? What can be done to improve the scheme?”
But Mr Harra said it was “extremely difficult” for HMRC to take account of households, adding that if they “had a lot of time” the government could work on developing the policy in a range of ways.
Ms Ali said this was “no comfort” for people who were in this “extreme situation”.
When asked by chair of the committee, MP Mel Stride, how HMRC planned to enforce only self-employed workers affected by the coronavirus receiving the grants, Mr Harra said they had “no plans” to check in advance of people claiming.
He said: “We’re relying on people using the scheme responsibly. We expect the majority of self-employed people to have been affected by the virus, but we know some people are considering not applying for the scheme because they do not need it.
“Also there is a natural protection as where grants are given to businesses, it will form part of their taxable profits, therefore it will boost their profits on their return next year.”
imogen.tew@ft.com
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