The managing director of a West Cumbrian firm says he is one of thousands of people forgotten by the Government during the Covid-19 crisis.

Lee Grears, who runs Responsive Ltd, has been forced to close two of his three businesses and furlough six of his 14 staff.

Because of the way limited companies are set up, directors take a small salary via the PAYE system and the rest is made up of dividends from their firm's profits, which are taxed twice before they end up as wages.

Any support on offer only takes into account the PAYE wage figure, which is often a very small amount.

Mr Grears said unless something was done, the worst case scenario would see directors forced to lay off staff, sell equipment and leave or sell their premises.

He added: "They will have no option but to do that to be able to put food on their own table - probably the worst situation as at that point there will be no employment for anyone."

He has closed Responsive Mechanical Testing and Responsive Training Services, in Whitehaven, while Responsive Non Destructive testing at Lillyhall is still operating at the request of the Health and Safety Executive.

As a director, he is paid differently to the self-employed. Directors are paid via the PAYE system, but a proportion of the wage comes from dividends on the profit of the firm, which is taxed separately by the Government.

He is calling for parity with the self-employed and wants the Government to offer directors the same terms.

Mr Grears said: "The dividends part of the wage and we can't get any support on it, at any amount.

"If a director is furloughed then they can only undertake statutory duties.

"However, if a self-employed sole trader uses the Government scheme, they can get up to £2,500 and carry on working.

"Directors of small limited companies are generally not millionaires and take the risk of reinvesting into the business to help make it more sustainable, resilient and a footing to enable growth – this obviously means that we can then employ people, train people and give people the opportunities and security that employment brings."

He has written to Copeland MP Trudy Harrison and Workington MP Mark Jenkinson, asking them to lobby the Government on the behalf of small company directors.

Mrs Harrison replied to Mr Grears and in the email, seen by in-Cumbria, she said she was pleased he was aware of the PAYE support and said: "You are right that dividends aren’t covered, this is because it is difficult to separate the dividends you get from your own company from the dividends you get from actual shares.

"For more support, I would suggest looking at business interruption loans, which are backed by the Government.

"There is also the fact that self-assessment income tax payments due in July can be deferred to the end of January next year.

"The Government has also announced measures to help people with the cost of living during this unprecedented time.

"You can benefit from a three-month mortgage holiday and deferring the next three months of VAT, alongside further measures to protect renters and to help people with their energy bills."

Yesterday, Mr Grears received a further email from Mrs Harrison, who said she would be contacting the Treasury to "inform them of the situation for people like yourself".

Mrs Harrison has been approached for comment by in-Cumbria.

A petition has been launched on and has more than 200,000 signatures supporting the demand for equal help of up to 80 per cent of average earnings, capped at £2,500.

Mr Grears added: "Some breaks put in place by the Government do help the here and now.

"VAT deferral for instance will help now, however its only deferred to a later date, it still needs paid.

"Crisis loans of up to £5 million are guaranteed by the Government to cover the bank at 80 per cent of the value should the company default, not the person taking out the loan.

"So again, a director takes the risk and borrows now. But if the business defaults on the loan because of no work over the coming months, then the director can lose their home before the bank approaches the Government for the remainder."

Michael Walby, partner at leading law firm Burnetts, believes there are thousands of people like Mr Grears.

He said: "Despite the ‘unprecedented’ packages of Government support for businesses and employees, I am speaking to a number of owners of small companies that have fallen between the cracks, and will really struggle to make ends meet during the period of lockdown.

"While some might argue that directors of these companies should be well-off enough to survive, a number we are speaking to are facing genuine hardship, as they are either start-ups, or do not have cash reserves to draw on.

"I am hopeful that the Government recognises that this group have fallen between two stools, and announces further measures to provide support to these business owners.

"I would strongly also recommend that these company owners speak to their local growth hub who can lobby the Government on their behalf, and sign up to the petition that is in circulation.

"Strength in numbers ought to make the Government sit up and listen."