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ACCOUNTING FOR SEISS

Accounts prepared on accruals basis : Provide for a debtor?

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Hi All

Accounts prepared on the 'accruals' basis

Just confirming that, in a situation where a client will be claiming SEISS later this week and should qualify (driving instructor), it would be correct to provide for SEISS in the accounts for the year ended 31st March 2020.  I intend to provide for 1 month's SEISS, on the basis that the client will receive a grant covering the three months to 31st May 2020, sometime in June 2020.  The client needs the accounts by the end of the week.  

As Income Tax and Class 4 NIC is payable on the grant, I intend to include the 1 month's provision for SEISS within the Profit and Loss Account (under a separate heading) and, therefore, include this within the Self Employment pages of the SA Tax Return for the year ended 5th April 2020, under the heading 'other business income' (either box SEF16 or box SES10).

Just for once, it would be nice if certain users of this site could avoid their apparent need to post facetious comments.  

Take care everyone and 'stay alert' (?!)

 

 

 

 

 

 

Replies (21)

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By Truthsayer
11th May 2020 10:29

I was genuinely intending to answer this in a serious manner, as it is a point that has occurred to me too. However, your penultimate sentence has put me off, so consider this a facetious comment.

Come back, Portia. We need you in these times.

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By Lin Wearn
11th May 2020 10:45

Thanks for that. Just proves my point.

Grow up.

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Replying to Lin Wearn:
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By Truthsayer
11th May 2020 11:22

Every single thing you have ever posted on this forum includes some sort of attack on other users. This is entertaining for me and others, but does not do you good in soliciting helpful responses.

By the way, when you reply to your own 'Anonymous' questions it reveals who you are. I know you're not doing that in this instance, but you have done it in the past. It always makes me laugh.

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Replying to Truthsayer:
John Stokdyk, AccountingWEB head of insight
By John Stokdyk
12th May 2020 15:42

This is getting really tiresome. When the conversations are more about the nature of the exchanges being made rather than the questions being asked, it really does spoil the experience for everyone involved.

It was a cheap sign-off on the OP, but had some justification.

Can all of the participants in this thread stop for a moment and think about why they're sniping at each other? Not only does it not solicit helpful advice, it diminishes the usefulness of Any Answers for other users.

Please just stick to the question asked, without get snarky at other members.

If we such any more of this stuff in the future, we may have to do more than issue a polite request like this.

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By ireallyshouldknowthisbut
11th May 2020 11:00

I think its a "what P&L / tax result does the client want?"

You could book it all in 20/21 if you wanted, split it on several different bases (time off, of your method which I would be less inclined to go with), or loop back to cash accounting if helpful.

It will certainly be case by case for me. Its a (hopefully!) one off accounting policy so consistency is not in point here, only GAAP which gives you options.

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By Matrix
11th May 2020 11:04

It had not occurred to me to book any in the books to 31 March. Most people only stopped working after 23 March and this scheme was only announced on 27 March.

Do you know where it says which 3 months it covers?

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Stepurhan
By stepurhan
11th May 2020 11:04

This is a free forum. Facetious comments (provided they don't break the rules) are part of the price you pay for not having a financial cost.

You may still get an answer to this, but attempting to dictate responses you are getting for free has made it a lot less likely.

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By Tim Vane
11th May 2020 11:39

I don't think the OP understands what facetious means.

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Replying to Tim Vane:
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By Lin Wearn
11th May 2020 11:53

Think she does....

Thanks for your invaluable contribution.

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By Lucy N
11th May 2020 11:43

Personally I intend to include the grant fully in 2020/21. It is only a week or so of trade in 19/20 and I think the loss of income likely to be more than 3 months worth in 20/21.

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Replying to Lucy N:
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By Open all hours
11th May 2020 12:37

Agree, if only to make it equal across the board bearing in mind that dozens of returns have already been filed before SEISS was calculated.

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By Lin Wearn
11th May 2020 12:47

Thanks to an article on the Low Incomes Tax Reform Group website, I'll now do what I had intended to do i.e. provide for a debtor.

https://www.litrg.org.uk/latest-news/news/200507-how-claim-grant-under-s...

The SEISS grant is taxable and subject to Class 4 National Insurance so will need to be included in your Self Assessment tax return(s). Depending on which accounting basis you use (cash basis or the accruals basis) and your accounting year-end, the grant may need to be apportioned between your 2019/20 and 2020/21 tax returns.

Thanks to those people who responded appropriately to my original post.

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Replying to Lin Wearn:
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By Truthsayer
11th May 2020 13:01

So you're thanking me then!

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Replying to Truthsayer:
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By Lin Wearn
11th May 2020 13:26

Course I am! There’s nothing quite like a bit of friendly banter to brighten the day up.

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Replying to Lin Wearn:
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By Matrix
11th May 2020 13:07

How are you going to calculate the debtor? Do you have an answer to my question since you appear to have missed my reply - which 3 months does the grant apply to? Thanks

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Replying to Matrix:
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By Lin Wearn
11th May 2020 13:40

Try here...

https://researchbriefings.files.parliament.uk/documents/CBP-8879/CBP-887...

section 2

Hope this helps and confirms that the first grant payment, due in June 2020, will indeed cover the 3 months March to May 2020 inclusive.

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Replying to Lin Wearn:
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By legerman
13th May 2020 09:41

Lin Wearn wrote:

Try here...

https://researchbriefings.files.parliament.uk/documents/CBP-8879/CBP-887...

section 2

Hope this helps and confirms that the first grant payment, due in June 2020, will indeed cover the 3 months March to May 2020 inclusive.

How would you treat my client? Worked up until 3rd April, so no loss of income in the 19/20 accounting year. I can't see the sense in increasing his income in the same year.

My own opinion: this is a taxable grant, not income received, and should be treated as such in the 20/21 tax year.

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Replying to legerman:
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By Lin Wearn
13th May 2020 12:30

Agreed, in that scenario I would probably do the same as you propose. Seems bizarre though that, as I understand it, the grant payable is ‘backdated’ to 1st March 2020, unless anyone knows differently?

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By richardcollett
12th May 2020 20:23

Out of interest, where in the legislation or HMRC guidance does it say that the SEISS grant should be included in the business accounts? I have only seen HMRC guidance that says the grant will need to be reported on the SA tax return.

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Replying to richardcollett:
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By Lin Wearn
13th May 2020 12:26

I agree with you. I can’t find where it says that the grant should be included within the business accounts, but it does say that National Insurance (logically Class 4) is due on it. By showing the SEISS grant on say the ‘other taxable income’ page of the Tax Return would this ensure that the NI due is collected?

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Replying to Lin Wearn:
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By richardcollett
13th May 2020 13:12

This is the latest HMRC guidance:
"You will need to report the grant:
• on your Self Assessment tax return
• as self-employed income any Universal Credit claims
• as self-employed income and that you’re working 16 hours a week, as changes to your tax credits claims
The grant should be treated as income received on the day it’s paid for any Universal Credit claims or tax credit changes."
We don't yet know how it will be recorded on the SATR but, assuming it's not included in the accounts, my guess is that there will be a new box on the self-employment pages to declare it.

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