Others meanwhile are able to abuse the system, it said. The government said its “top priority” was helping those who are struggling.
Since March 2020, HM Revenue and Customs have reportedly provided more than £80bn in support to companies, small businesses and individuals through government coronavirus support schemes. They are also supporting the incomes of many of the self-employed.
But despite this, a report from the MPs says “quirks in the tax system” have meant that groups of workers – including thousands of freelancers and the self-employed who recently moved onto company payrolls or work on a series of short-term employment contracts with gaps in between – have been ineligible for furlough payments.
“As public spending balloons to unprecedented levels in response to the pandemic, out-of-date tax systems are one of the barriers to getting help to a significant number of struggling taxpayers who should be entitled to support,” said MP Meg Hillier, chair of the Public Accounts Committee (PAC).
By contrast, she said some large companies that had used government support schemes had continued to pay dividends to shareholders and high salaries to executives. She added that HMRC was in many cases failing “to capture or deal with those wrongly claiming” support. The tax agency should explain to freelancers and other groups why they have been excluded from receiving support and set out steps to fix the problem within six weeks, the MPs said.