MPs have given HMRC six weeks to come up with solutions for freelancers and others excluded from receiving Covid financial support.
In its report, the influential Public Accounts Committee has asked the taxman to explain why 1.6m freelancers alone have been excluded from Covid help, let alone the 3m excluded overall.
MPs blamed “quirks in the tax system” making groups of workers, including freelancers and the self-employed, ineligible for furlough payments.
Meg Hillier MP, chair of the PAC, said: “As public spending balloons to unprecedented levels in response to the pandemic, out-of-date tax systems are one of the barriers to getting help to a significant of struggling taxpayers who should be entitled to support.”
The PAC MPs are just one group calling for the chancellor to give financial support to freelancers excluded from Covid support.
Meanwhile, former Brexit secretary David Davis has written to chancellor Rishi Sunak asking him to ensure that the newly self-employed are included in the final found of Self-Employment Income Support Scheme (SEISS) grants.
This could see more than half a million freelancers qualifying for emergency Covid financial support after all. This is because they have now filed accounts for the 2019-20 tax year, proving their self-employed status.
However the chancellor has repeatedly refused to budge on the issue, saying that only those self-employed who filed tax returns for the 2018-19 tax year by April 2020 qualified for support.
The self-employed support scheme has paid out almost £20bn to close to 3m people in three separate tranches. The government has extended the scheme until April and will pay out a fourth round of grants next month.
Former pensions minister and co-chair of the APPG on Gaps in Support, Esther McVey, said: “Too many of those who made the leap into self-employment have been denied desperately-needed help because of a quirk of timing.
“The Treasury already has funds that could be used for a scheme such as this: supermarkets have returned £2bn of business rates relief which they did not need.
“This money was returned in good faith and must be used to support businesses and individuals who have thus far had no support whatsoever.”