Share this content

SEISS 4

SEISS 4 - 2019-20 has full year state pension

Didn't find your answer?

Client successfully claimed SEISS 1,2 & 3. In 2019-20 trading Loss about 1K and state pension about 7K. Should he qualify based on prior 3 years or does he now not qualify at all because in 2019-20 his other income in excess of 50% of total income. I have looked at HMRC guidance but cannot see if he should qualify as average of 4 years, or now disqualified from claiming. 

Has anyone out there seen more detail than I can find?

 

Replies (11)

Please login or register to join the discussion.

avatar
By jonharris999
13th Apr 2021 19:12

The guidance says:

"If you’re not eligible based on your 2019 to 2020 Self Assessment tax return, we’ll then look at the tax years 2016 to 2017, 2017 to 2018, 2018 to 2019 and 2019 to 2020."

Needs also to have been still trading in 2020/21 and intending to continue, of course.

Does that not address your question?

Thanks (1)
avatar
By fawltybasil2575
13th Apr 2021 19:49

@ CJaneH (OP).

@ To reinforce the post by jonharris999, this is the legislation (the Treasury Direction for SEISS 4) which supports the GOV.UK guidance from which jon has provided you with an extract:-

https://assets.publishing.service.gov.uk/government/uploads/system/uploa...

If you scroll down to 5.2.2 (c) of the Schedule to that Treasury Direction, there is the relevant part which hopefully will provide you with the required assurance that a SEISS 4 claim is valid. Given that the income requirements for 2019/20 alone are not met, one then considers whether those requirements are met by the average of the 4 years to 2019/20. I note your saying:-

“Should he qualify based on prior 3 years . . . “,

from which I assume (albeit please confirm) that he DID qualify for SEISS 3 under that “average of 3 years 2016/17 to 2018/19” rule (he may of course have ALSO qualified for SEISS 3 on the basis of the 2018/19 figures alone).

On that assumption, then it appears ALMOST certain that he will qualify under the “average of the 4 years 2016/17 to 2019/20” rule. It is of course possible that if he was “near the borderline” in qualifying under the 3 years to 2018/19 average, then the Loss in 2019/20 might possibly result in his not qualifying on the basis of the 4 years 2016/17 to 2019/20 average.

Basil.

Thanks (1)
Replying to fawltybasil2575:
avatar
By piggybank
14th Apr 2021 07:50

Hi,
I’ve been asked to look into a similar situation today. HMRC has indicated to my client that the £50000 earning and more than 50% non-trading income in 2019/2020 tax year override it all and no averaging will be considered.
I’ve not looked at the full guidance yet, but my client said HMRC had been pretty clear.

Thanks (1)
Replying to piggybank:
avatar
By jonharris999
14th Apr 2021 08:36

That's clearly wrong, so either there has been communication with a misinformed HMRC person, or some kind of IT glitch in this case, or (possibly more likely?) the client is misconstruing some aspect of their affairs which renders them ineligible. (I only hazard that that's more likely because it's been the case more often in the past.)

Thanks (2)
Replying to piggybank:
Kitten
By Hazel Accounts
15th Apr 2021 00:52

A client of mine with £52k profit last year but 4 year average under that has been invited to apply so the £50k+ earnings in 2019/20 shouldn't be the problem. HMRC would seem to be applying averaging to this. (This client has no other "non-trading" income)

Thanks (0)
Replying to Hazel Accounts:
avatar
By Hugo Fair
15th Apr 2021 11:40

This indeed follows the 'steps' as outlined by Basil (and as set out in the legislation) ... if No to step 1, then try step 2 (the averaging).

Thanks (1)
avatar
By CJaneH
14th Apr 2021 09:50

Thanks for every ones' responses. Low profits on the first three years. So average for 4 years would give a profit.

Thanks (0)
Replying to CJaneH:
avatar
By Hugo Fair
14th Apr 2021 12:45

"So average for 4 years would give a profit" ... doesn't automatically follow, but I'm sure you're right.
However that's only the precursor to the need for:
* the average amount of the person’s trading profits of those tax years being £50,000 or less (but more than nil); AND
* the sum of those profits being equal to or more than the sum of the person’s relevant income for those tax years.
Again, I'm sure you knew that but worth mentioning in case other readers don't.

Thanks (0)
avatar
By fawltybasil2575
14th Apr 2021 10:11

@ piggybank (your 7.50 post).

For persons who carried on trades in all 4 years 2016/17 to 2019/20, the key lies in 5.2.2. of the Schedule attached to the Treasury Direction (see the link per my post yesterday).

It appears possible, if indeed (albeit, as jonharris999 has stated in his post today, this is perhaps the less likely cause for the client’s misunderstanding) the client has received incorrect advice, that the HMRC advisor has ONLY considered 5.2.1. It is the NEXT section (ie 5.2.2) which enables one to adopt the “averaging of the four years” (2016/17 to 2019/20).

Importantly, 5.1 (a) gives the taxpayer the option to use EITHER of Conditions A or B (5.2.1 relating to Condition A and 5.2.2 relating to Condition B).

[Purely for completeness, 5.1 (a) of course refers not only to Conditions A and B, but also to Conditions C and D – those Conditions C and D are however not relevant as they do not apply if, as in the OP’s case (and, I assume, in your client’s case also) the taxpayer has received income from trades in ALL 4 years].

Basil.

Thanks (0)
Replying to fawltybasil2575:
avatar
By piggybank
14th Apr 2021 11:00

Hi,
Thank you very much for your feedback, both Basil and jonharris999. I will have to double check my clients details indeed, but this seem like good news.

Thanks (0)
Replying to piggybank:
Kitten
By Hazel Accounts
15th Apr 2021 00:57

You say low profits in 3 years and loss in year 4 - what is the average of all 4 years? If less than the £7k pension in 2020 then not eligible now.

Thanks (0)
Share this content