DCMS Covid-19 Economic Response Department
100 Parliament Street
3rd June 2020
Many thanks for coming back to me with such a full response.
Firstly, I’d like to say that I appreciate the unprecedented challenges the department – and Government - is facing, and the demand on resources from across all sectors of the country.
I would however like to pick up with a few points you raised – and offer some suggestions.
I understand that from the tax returns it receives, HMRC cannot distinguish between how much of a dividend is made up from ‘earned’/ generated income and how much from ‘passive’ income (eg investments.)
However, accountants do have this information and could confirm the breakdown of revenue sources with a single, certified email/ letter. I’ve spoken to media accountants who have said this would be a very straightforward and quick information clarifying exercise of the sort they regularly provide HMRC.
It’s worth stressing again that most company directors, especially those individuals running PSCs, take their renumeration in dividends to help manage cashflow, and because they do not know until the year end what they have earned, and how much they can take from the business. Very few are in a position to be able to assign a regular monthly income.
2] The recently self-employed
On the question of the recently self-employed, I understand the Government’s concerns about risk of fraud. However, there is no need for HMRC to lessen the due diligence it does if returns for the year to April 2020 were included in eligibility for SEISS. If it set an imminent deadline of, say, end of June with a view that payments under the SEISS would take some months to be issued, at least the individuals would have a degree of confidence to take out loans to support themselves in the interim. At present – I know this from personal experience – manypeople, and business owners, are loath to sink further into debt with little idea of how, or if, they will be able to pay them off.
3] I appreciate that the creative industries are unusual in that freelancers often work a combination of both PAYE and self-employed in any given year. This is not a matter of choice: it is because HMRC itself has stipulated it based on the job title, or credit, the individual is given on a particular production. However, one of the consequences is that significant numbers of people fall either just below the SEISS threshold (because self-employed profits constitute less than 50% of their take home earnings) or just over it and as a result receive just a fraction of what they need to survive. Given HMRC has information on both, has this been raised with HMT/ HMRC and what is their view?
4] I would be grateful too if you could clarify this statistic: ‘’... those who had more than £50,000 from self-employment profits in 2017-18 had an average total income of more than £200,000’’. I’ve seen it mentioned elsewhere but I’m unclear its source.
Is the £200,000 referring to ‘turnover’ – ie all the revenue a self-employed person receives before costs?
Or is it saying that, of all those people with profits of £50,000 and above, the average profit is £200,000? Specialists I’ve spoken to say this seems unlikely as most high-earning ‘self-employed/ freelance’ individuals would not be set up as ‘self-employed’ entities.
To give it a human face, here is an email I received recently from one of our members, an experienced freelance TV producer – which is fairly typical.
‘’I have had to turn down 2 very scarce offers of freelance jobs in TV production during this period.
The first was because I was following the government's rules about self-isolating when displaying Covid symptoms and the second because my children are not in school and carers weren't allowed in my house to look after them while I worked. How can it be that I am not entitled to any support at all when the government's restrictions have prevented me from earning? We are only asking for parity and fairness with other UK workers. This would have the added advantage of protecting the UK creative industries which in normal times contribute so much to the exchequer and cultural life of this country.’’
Again, I appreciate the extraordinary challenges the Government is facing but I’d be grateful – on behalf of the 100,000+ freelancers who are members of our Talent Manager community – if you could get back to me on these points, and continue to take their cause to the Treasury.
Two-thirds of freelancers in the TV and film industry are currently receiving no financial support at all, and half are considering leaving for the industry – an industry in which the UK is a genuine worldleader - for more stable and secure professions.
If even a fraction of them do, it would severely hamper the UK’s production capacity. That, in turn, would have a significant detrimental impact on long-term tax revenues, UK trade, our ability to help pay down the national debt, and the wider digital economy.
DV Talent/ The Talent Manager