Question to the HM Treasury:

To ask the Chancellor of the Exchequer, what the reasons for the differences in self-certification requirements for limited company directors for accessing (a) income support, (b) the self employed income support scheme, (c) submitting a tax return and (d) other aspects of the tax system.

The tax system relies in part on self-certification through Self-Assessment as it is not possible to corroborate all information received from taxpayers. HMRC have various controls in place to mitigate the fraud risks associated with Self-Assessment. The risks associated with this depend on the type of scheme. For example, the risk is higher when HMRC are paying money out than when they are taking money in. Controls in place in the Self-Assessment system to mitigate fraud risk associated with self-certification have been built up and tested over many years and have proven to be very effective at preventing fraud.

In relation to wider income support, self-employed Universal Credit (UC) claimants must report their earnings each month in order for their payment to be calculated and released to them. If a Work Coach suspects that a claimant is misreporting their earnings to inflate their award, they can refer the claim to be investigated for fraud.

UC presents a different type of risk compared to COVID-19 support schemes. The Government has been clear that due to the generosity and speed of delivering the COVID-19 support schemes, they could be subject to opportunistic fraud and perhaps even criminal activity. On the Self-Employment Income Support Scheme, its purpose is to support the incomes of people who have lost earnings due to the pandemic. The scheme relies on verified HMRC data to identify and target support to those in need. Unlike the SEISS grants that use information HMRC already hold, targeting additional support at limited company directors would require them to make a claim and submit information that HMRC could not manageably or consistently verify in order to ensure that payments were made to eligible companies and for eligible activity. Relying on self-certification to identify directors or determine income sources could open the scheme up to unacceptable levels of fraud and error.