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£10,000 Local Authority grant after cessation

Client was paid the grant after trading ceased. Is it income of the business?

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Our client had the misfortune to be flooded out of his business premises in mid February of 2020. As it was not the first time he'd suffered like this he decided to throw in the towel. Then COVID-19 arrived - and the local council sent him his £10,000 grant. Is this income of the business or not?

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A Putey FACA
By Arthur Putey
29th Jan 2021 18:57

Was he a fishmonger?

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By LukeS
29th Jan 2021 19:38

..

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By Wanderer
29th Jan 2021 19:22

Yes, income of the business.

What date did he decide to cease trading from? If 1 April 2020 or after then just business income. If before 1 April 2020 probably technically a post-cessation receipt but I'd just include it in the 2020 return.

Note HMRC may rewrite the present thought process when they print the 2021 tax returns and guidance notes.

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Replying to Wanderer:
Backwoodsman
By backwoodsman
29th Jan 2021 19:32

Thanks Wanderer. Probably realistically he decided not to re-open in April or May, when it was clear that the flood damage was going to put him out of action for several months, and it once it started to look like Covid was going to cause long-term damage to his business, on top of what he'd already suffered.

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Psycho
By Wilson Philips
29th Jan 2021 20:48

“The local council sent him his grant”

Without asking for it? If he did ask for it, before or after he decided to shut up shop?

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Replying to Wilson Philips:
boxfile
By spilly
29th Jan 2021 21:33

Yes, our local council paid out automatically to any business that qualified for the Small Business Rates Relief. I understand that quite a few councils operated the scheme this way.

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Replying to Wilson Philips:
blue sheep
By NH
29th Jan 2021 21:48

It was a mixed bag, some got paid out automatically some had to jump through hoops (us included).
It sounds like they got the grant but then decided it wasn't worth their while carrying on in which case they were still trading when the grant was paid.

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By LukeS
29th Jan 2021 23:22

So he had already decided to shut shop but then got £10,000. Marvellous. Great morals there.

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Replying to LukeS:
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By Wanderer
30th Jan 2021 01:34

The Eligibility date was 11 March. Subsequent events didn't affect eligibility.

The Entitlement date was earlier of the date of payment of the grant by the Local Authority or 1st April 2020.

Not sure I'd begrudge the grant to a trader that suffered a (further) flood in February, was hit by CV-19 in March / April, received the grant probably sometime in April, then decided to throw in the towel in April or May.

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Replying to Wanderer:
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By LukeS
30th Jan 2021 05:25

The OP says he decided to throw in the towel in February

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Replying to LukeS:
RLI
By lionofludesch
30th Jan 2021 07:01

He said April or May.

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Replying to LukeS:
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By Wanderer
30th Jan 2021 07:31

No he didn't, see Lion's post.

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Replying to Wanderer:
RLI
By lionofludesch
30th Jan 2021 07:57

To be fair, he did kind of imply it in the OP.

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Replying to lionofludesch:
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By Wanderer
30th Jan 2021 08:20

Maybe, but clarified it in their 29th Jan 2021 19:32 post, before Luke's.

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Replying to LukeS:
blue sheep
By NH
30th Jan 2021 07:56

Morals? here we go again....how in devils name do you know anything about the moral fortitude of the poor chap, he was the registered rates payer on the qualifying date so he got the grant legitimately like everyone else, nothing more to be said and nothing to do with "morals"

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Replying to NH:
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By LukeS
30th Jan 2021 09:25

You know full well the system was introduced at breakneck speed to get the money out there. No checks done. This person has decided in February after a flood to call it a day. Then when he got 10k he suddenly decided to stay self employed a bit longer.

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Replying to LukeS:
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By memyself-eye
30th Jan 2021 09:59

My local authority telephoned me to advise that the scout group I am treasurer of, qualified for the Covid grant (as they own a premises) even though the scouts get 100% business rates relief - and invited me to apply on line, which I did.
The authority has been sending various amounts ever since.
The scouts now have 3 times as much in their bank account as before!
So, not surprised the poster received this money unbidden.

It is truly a mad, mad world.

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Replying to LukeS:
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By Wanderer
30th Jan 2021 10:28

What checks do you think would have had any effect on whether the OP's client qualified for the grant? This is not like the bounce back loans where next to no checks were done in many cases, nor the SEISS grants whereby there were certain conditions where the applicant had to effectively self certify.

Based on the information we have been given the OP's client fully qualifies. Even if he did make the decision that you have concluded he made in February he still qualified.

I think there are a lot more undeserving cases that have been given support in the last year compared to that outlined in this thread.

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Replying to Wanderer:
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By LukeS
01st Feb 2021 14:23

No he doesn't, he had already decided to cease trading, just hadn't got around to deregistering.
You can dress it up how you want, it still smells like a [***]

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Replying to LukeS:
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By Wanderer
01st Feb 2021 16:20

LukeS wrote:

No he doesn't, he had already decided to cease trading, just hadn't got around to deregistering.
You can dress it up how you want, it still smells like a [***]

You clearly haven't bothered to read the guidance have you?
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Replying to LukeS:
RLI
By lionofludesch
30th Jan 2021 11:18

LukeS wrote:

So he had already decided to shut shop but then got £10,000. Marvellous. Great morals there.

I think some folk are forgetting how rapidly the situation was changing a year ago.

Few at that time would be expecting lockdowns to drag on for months. £10000 would probably have seemed a reasonable sum to tide a business over to better times.

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Replying to lionofludesch:
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By LukeS
01st Feb 2021 14:06

He wasn't shutting due to covid. He had already decided in February to shut up shop due to the flood. Only when hearing he would get the grant did he suddenly decide to stay open.

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Replying to LukeS:
RLI
By lionofludesch
01st Feb 2021 16:25

LukeS wrote:

He wasn't shutting due to covid. He had already decided in February to shut up shop due to the flood. Only when hearing he would get the grant did he suddenly decide to stay open.

"Thanks Wanderer. Probably realistically he decided not to re-open in April or May, when it was clear that the flood damage was going to put him out of action for several months, and it once it started to look like Covid was going to cause long-term damage to his business, on top of what he'd already suffered."

No, he hadn't. Have you invested any time in actually reading this thread, Luke ?

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Lisa Thomas
By Insolvency Practitioner
01st Feb 2021 11:57

I suspect the company needs to repay it.

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Replying to Insolvency Practitioner:
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By Wanderer
01st Feb 2021 12:12

And you basis for that suspicion?

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Replying to Wanderer:
Lisa Thomas
By Insolvency Practitioner
01st Feb 2021 12:25

Due to the change in circumstances since the client applied for it.

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Replying to Insolvency Practitioner:
RLI
By lionofludesch
01st Feb 2021 12:41

Insolvency Practitioner wrote:

Due to the change in circumstances since the client applied for it.

But he didn't apply for it.

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Replying to lionofludesch:
Lisa Thomas
By Insolvency Practitioner
01st Feb 2021 13:47

In our local area you had to apply for the grant.

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Replying to Insolvency Practitioner:
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By LukeS
01st Feb 2021 14:08

Yes, everyone still had to apply for it, even if they were told they were eligible.

This person suddenly found out he was going to get £10K for nothing, so suddenly decided he WAS eligibly by delaying his pre-covid decision to shut.

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Replying to LukeS:
RLI
By lionofludesch
01st Feb 2021 15:02

LukeS wrote:

Yes, everyone still had to apply for it.

No, they didn't.

The OP specifically says that his client did not need to apply.

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Replying to LukeS:
blue sheep
By NH
01st Feb 2021 15:14

LukeS wrote:

Yes, everyone still had to apply for it, even if they were told they were

I can confirm that is incorrect, some clients were automatically given the money, some knew absolutely nothing about it until the money landed

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Replying to Insolvency Practitioner:
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By Wanderer
01st Feb 2021 12:49

Suggest you read the guidance notes. It was specificically written into the guidance that certain changes in circumstances after the eligibility date did NOT affect entitlement.

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Replying to Wanderer:
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By LukeS
01st Feb 2021 14:21

Except his circumstances changed BEFORE covid

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Replying to LukeS:
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By Wanderer
01st Feb 2021 16:21

LukeS wrote:

Except his circumstances changed BEFORE covid


You clearly haven't bothered to read the guidance have you?
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Replying to Insolvency Practitioner:
blue sheep
By NH
01st Feb 2021 12:50

Insolvency Practitioner wrote:

Due to the change in circumstances since the client applied for it.

If that was the case do you have legislation to back that up?

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