The Government response to a petition signed by over 59,000 small company directors of limited companies has not addressed the concerns of the petition so far and suggests a lack of understanding of their plight during the coronavirus outbreak.
This is the opinion of TaxAssist Accountants, who are behind the petition and whose network of accountants represents more than 77,000 small businesses across the UK. It believes that while Government support does indeed meet the needs of 95% of small businesses, a significant 5% are being unfairly and unjustly ignored.
Daren Moore FCCA, Group Commercial Director, points to the petition, and the traction being gained by #ForgottenLtd movement, as proof of the level of dismay among directors who are losing income at this time.
“Many customers won’t deal with sole traders and so thousands of plumbers, electricians, carpenters, and even journalists set up as limited companies in order to trade,” explained Mr Moore. “They tend to pay themselves a small monthly wage, topped up through dividends, but only when the money has been earned.
“The problem is that support under the Coronavirus Job Retention Scheme (CJRS) is calculated on PAYE, and does not take dividends into account, leaving many directors facing financial ruin. The Government response is to furlough, but how can you not work for your business when you are the one who keeps that business afloat?
“It’s as though the Government sees these forgotten 5% as undeserving of financial support as they must be rich enough already. They are not, and they have all been affected by the Coronavirus outbreak and are being asked to borrow money instead of receive a grant or a real option to receive furlough payments.”
A new survey of 1,500 directors of small limited companies by TaxAssist Accountants highlights the problem and wider issues faced by small limited companies:
- 79% say crisis has serious impacted their business (only 2% say it has not)
- 91% concerned over loss of income; 36% lost productivity; 33% fear business closure
- 58% fear losing up to 100% of their income in the next three months; a quarter (26%) have immediate cashflow problems.
- 31% have furloughed staff and a further 8% plan to do so; only 15% can afford to top up payments
- 71% concerned about eligibility for funding; 6% had been declined funding
- Only 11% think the Government is doing enough to support them.
According to the #ForgottenLtd movement, there are about 5.8 million small limited companies employing 13.2 million people in the UK.
“We simply want a COVID-19 Support Package for Directors that is in line with that offered to the Employed and Self-Employed,” added Mr Moore.
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Last updated: 14th May 2020