MTD could have helped millions more self-employed access Covid support

Self-employed people could have had access to better support during the pandemic through MTD, says HMRC’s Jim Harra

If the tax watchdog had been able to collect real-time data under its Making Tax Digital (MTD) initiative, more self-employed could have been supported when the pandemic hit, says HMRC’s chief executive.

Jim Harra told the Financial Times that the government could have responded quicker to the needs of the self-employed if it had access to more real-time information on their income, like it has for employees.

The Coronavirus Job Retention Scheme (CJRS), which allowed employers to furlough staff and covered 80 per cent of their wages up to £2,500, was up and running by April 2020 – just four weeks after the first lockdown was announced.

However, the self-employed had to wait another four weeks before the Self-Employment Income Support Scheme (SEISS) was launched. The scheme itself helped around 2.7 million self-employed and small businesses, leaving 3m people working for themselves – whether as sole traders or limited company directors – to fall between the gaps in support. 

HMRC couldn’t verify earnings of 3m self-employed

These small business owners weren’t eligible to claim support because they had just started and not filed a tax return or were a director of a limited company. According to Harra, for these people it was difficult for HMRC to verify their earnings.

Harra explained: “Making Tax Digital for self-assessment means that businesses will be providing us with data about their business income much more frequently than they have been in the past, much more in real time.

“And yes, I think if we’d had that data, we could have helped more people.”

MTD for self-assessment would require businesses and individuals to keep a digital record and report their incomes to the tax authority every quarter. 

MTD is an opportunity to make ‘tax system easier’

It was rolled out for VAT-registered businesses in April 2019 with all businesses required to sign up by April 2022. 

MTD was due to be expanded to include all self-employed people and small businesses submitting a self-assessment tax return in April 2023. However, this has now been pushed back by one year.

It requires taxpayers to provide HMRC with more data, which raised some concerns for many. But, Harra said, this is not an “oh right, they’re [HMRC] going to sort of snoop on me and try and catch me”, it is an opportunity to make the tax system simpler and easier to use.

“I think, what we did during the pandemic on support, we can equally do on the tax system. We can use real-time data to help people as well, make their lives easier.”


  • M says:

    Managed to handover tons of cash to companies that barely had a footprint, including no accounts though ?

  • Gary Andrews says:

    Titanic levels of gaslighting here from Jim Harra. “HMRC couldn’t verify earnings of 3m [contractors and some] self-employed” what utter sh*te. The longer term self-employed had their support calculated from their 3 previous tax returns while directors where vindictively ignored, most having 3 prior tax returns, why no support?

    Who is holding these truth twisters to account?

    He simply took the opportunity to punish his favourite whipping boys. How many more contractor suicides can Harra conceal in his conscience?

  • Johnny says:

    The @loanchargeAPPG has called on ministers today to ‘urgently think again’ on the loan charge after it was revealed that eight cases of suicide have been linked to demands for payments. Co-chair Greg Smith said retrospective tax changes “are simply never fair”. Support NC7.

    • Paul says:

      The Ministers responsible are Mel Stride and Jesse Norman. Both guilty as hell. (Lord) Amyas Morse is just as guilty for whitewashing his crooked ‘independent’ report in exchange for a knighthood. I hope you enjoyed your ‘case of beers’ from your buddies straight after. Did you ever find the original report submitted to number 10 for review, then ‘destroyed’?
      Time to do the right thing here! Loan charge date needs to change from 2010 to 2017. It’s that simple!!

      • Johnny says:

        Unless this injustice is fixed, there will be more suicides. Why is Morse silent?

        • Ray says:

          The only “experts” Morse called for evidence where those who had publicly supported HMRCs “view of the law”.
          Any who had not backed up HMRC/HMT were excluded from giving evidence in Morse’s sham inquiry.
          They only listened to people who already agreed.
          Amyas Morse failed himself!

    • Arthur says:

      Complained mightily “right of appeal” was important when it came to MPs but happy where the loan charge DELIBERATELY removes the right of appeal.
      Time for a new & INDEPENDENT review.
      Lets pray MPs support NC7 on Wednesday.

  • Mark says:

    Today MPs have a chance, to help Loan Charge Scandal victims by voting for NC7. But if we get an independent review how do we ensure it is independent this time without HMRC whispering in the ears of those involved?
    The result should not be decided before the review starts.

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