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Claiming 5th SEISS grant

Can the 5th SEISS grant be claimed if there is a change of trading activity?

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I have a sole trader client who ceased a trading activity on 31st March 2021 and started a new, completely different trading activity on 1st April 2021.

Assuming they are affected by covid bewteen 1st May and 30th September 2021, can they claim the 5th SEISS grant?  I don't believe they can but I am interested to hear other peoples thoughts about this.

Thanks

Replies (17)

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By jonharris999
23rd Jul 2021 15:09

I would say that they can, although I can see the grounds for an argument, and I believe it would turn on various uses in the Directions of the phrases "a trade" and "the trade". I can't see evidence that the door has firmly been closed here (although I accept I might have missed something).

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Replying to jonharris999:
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By SXGuy
23rd Jul 2021 15:22

Personally I took the view that "carrying on A trade" meant exactly that. To continue to trade as self employed regardless of what that trade is/was.

Happy for hmrc to argue the toss, but it could have been quite easy to have said "continue THE trade"

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Replying to SXGuy:
By Duggimon
23rd Jul 2021 15:31

However, he has not carried on a trade throughout, having ceased one day and started the next.

Perhaps the original trade ended on 5 April?

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Replying to Duggimon:
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By Kezza43
23rd Jul 2021 15:49

I do believe there was actually some overlap by a month.

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Replying to SXGuy:
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By jonharris999
23rd Jul 2021 15:41

When you get to the FID Test there is a sleight of article, if I may put it like that. "A trade" turns magically into "the trade".

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Replying to jonharris999:
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By Kezza43
23rd Jul 2021 15:49

Do you have a link to that please?

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Replying to Kezza43:
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By jonharris999
23rd Jul 2021 15:54

https://www.gov.uk/government/publications/treasury-direction-made-by-th...

FID test at Part 2, para 6.

But as @SXGuy correctly says, qualifying is on the basis of "a trade" in all SEISS Direction editions. Discussed here on several other threads that changing trade doesn't affect eligibility in the previous rounds.

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Replying to jonharris999:
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By Kezza43
23rd Jul 2021 16:08

So I will be comparing the reduced turnover from the new trade to that of the old trade?

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Replying to Kezza43:
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By jonharris999
23rd Jul 2021 16:39

My argument is that this is what the Directions are inviting you to do, in the absence of any clearer Direction.

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Replying to Kezza43:
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By [email protected]
23rd Jul 2021 17:41

Kezza43 wrote:

So I will be comparing the reduced turnover from the new trade to that of the old trade?

No, because the turnover comparison is between 20/21 and 19/20 - so the new trade doesn't fall into that period (well, maybe the last few days of it)

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Replying to [email protected]:
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By jonharris999
23rd Jul 2021 18:29

Quite right @manda, and there I go falling into the same trap I've been so assiduous at pointing out to others, because it's so darn confusing.

Two comparisons are required:

i) between May-Sept 21 turnover as it is, and between what claimant believes it would have been in the no-Covid universe;

ii) between 20/21 and 19/20.

So there's less of a dilemma posed than I said there was above between "a" and "the", and therefore this is a solid claim provided i) and ii) give the correct answers.

Sorry for my confusion.

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Replying to jonharris999:
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By Latinaid
03rd Aug 2021 09:43

jonharris999 wrote:

Quite right @manda, and there I go falling into the same trap I've been so assiduous at pointing out to others, because it's so darn confusing.

Two comparisons are required:

i) between May-Sept 21 turnover as it is, and between what claimant believes it would have been in the no-Covid universe;

ii) between 20/21 and 19/20.

So there's less of a dilemma posed than I said there was above between "a" and "the", and therefore this is a solid claim provided i) and ii) give the correct answers.

Sorry for my confusion.

For May - Sept 21, the claimant needs to consider their profit, not turnover - though I think in practice, since you can't claim because of increased costs, then it's got to be reduced turnover which affects the profit.

And yes, the claimant needs to dust off their crystal ball to decide whether their profit would have been higher without COVID. Of course, if they've had to self-isolate during that time, or taken time off to care for a child unable to go to school because of COVID, then that would affect profits - and in the absence of a definition of 'significant', it will be up to the claimant to decide whether those missed days have a significant effect.

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Replying to SXGuy:
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By Kezza43
23rd Jul 2021 15:47

Good point.

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By AthollAccounts
03rd Aug 2021 09:10

In earlier grants HMRC counted continuous self employment as a single trade whether it was or not.
However if the business has just started in April how can the sole trader say their business has been affected by covid when they don't have anything to compare against?

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Replying to AthollAccounts:
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By Latinaid
03rd Aug 2021 09:46

AthollAccounts wrote:

In earlier grants HMRC counted continuous self employment as a single trade whether it was or not.
However if the business has just started in April how can the sole trader say their business has been affected by covid when they don't have anything to compare against?

I suppose they have to think about how things are going in their business, and imagine what it would be like without COVID restrictions. For instance, if they have to spend a lot of time cleaning between customers, then that will reduce the number of customers they can service, so they can declare that their profits are reduced (even though they have no period of profits to compare it with).

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Replying to Latinaid:
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By Hugo Fair
03rd Aug 2021 12:16

I know what you mean, but it's not that 'simple' ... for instance the impact on a business from Covid can be much less direct than the restrictions - but still real.

A conversation I had yesterday with local hairdressers:
Me: I see you're still only allowing pre-booked appts, enforce mask usage and deep clean eqpt/chairs between appts ... so is that affecting your revenues?
HD: No; but we're only operating at 70% capacity instead of historical 95+%
Me: How come?
HD: Well all the regular clients have slowly returned for their standard (monthly or whatever) cuts, but many of them used to have 'extra' appts before important meetings or weddings or even just going to the theatre etc. But few of them are keen to return to such activities, so that tranche of business has disappeared.
Me: What are doing about that?
HD: Battening down the hatches for a couple of years whilst we see how much public behaviour has changed for good or starts to return to 'normality'.

Long-winded illustration of ... the legal restrictions are lifted and yet a local business continues to suffer - so does this 'entitle' them to claim?

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Replying to Hugo Fair:
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By Latinaid
03rd Aug 2021 12:27

Hugo Fair wrote:

Long-winded illustration of ... the legal restrictions are lifted and yet a local business continues to suffer - so does this 'entitle' them to claim?

I'd say definitely yes. My partner is a driving instructor - he has to clean the car thoroughly between each pupil (and during lessons sometimes eg. if it's a beginner and he has to drive them to and from a suitable place for them to start driving). So he is currently doing one fewer pupil per day - I'd say that a significant reduction in profit.

Of course, demand is high, so in theory he could maintain his previous profit level by working on Saturdays and Sundays - but he'd like to have a life.

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