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SEISS 5 - finally an answer -

- to the "turnover compared to what?" question

Didn't find your answer?

https://www.gov.uk/guidance/work-out-your-turnover-so-you-can-claim-the-...

And the answer is apparently "compared to 19/20, unless that was an abnormal year for you for some reason that you can tell us, in which case you can use 18/19 instead".

 

 

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By SXGuy
06th Jul 2021 17:28

Thanks for this. Already had a few clients call querying the email they got.

Wasn't quite sure what they meant until now.

Looks like all the late stradlers this year better come in if they want to claim the grant.

What I'm not clear on is

Those who have accounts that straddle two tax years. For example someone with a July year end,

Are they asking for the turnover for 20/21 reported on the 20/21 tax return (aug 19 to Jul 20) or are they asking you to calculate the turnover between 1st/6th April 20 to 31st march/5th April 21?

They say they can check if the info is correct which makes me believe they want what was reported in the tax year not what the turnover was for the period they state??

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Replying to SXGuy:
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By jonharris999
06th Jul 2021 17:29

Quite - it's a ready-made motivation to get 20/21 done.

Applics open to 30th Sept.

Ref your q about straddling 2 years - apparently it's the latter. Turnover from 1/6 Apr for 12 months.

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Replying to jonharris999:
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By SXGuy
06th Jul 2021 17:39

Oh wow. So basically more work for me for some clients then.

How they can say they can check the info is correct is beyond me since they won't have that figure.

Edit: but if you read there guidance it says the reference year figure must be the one on the 19/20 tax return and cover 12 months.

So technically that would be turnover that does straddle 2 tax years.

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Replying to SXGuy:
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By Hugo Fair
06th Jul 2021 17:46

"So basically more work for me for some clients then" ... spot on.
The wording in the email issued to agents an hour ago says:

"You can support your clients now to get ready:
• If your clients are eligible for the fifth SEISS grant and intend to claim, they may need to calculate their 2020-21 turnover figure. We will contact customers from mid-July to let them know if they need to do this.
• Customers do not need to submit their 2020-21 Self Assessment tax return at this time, even though we are asking them for their 2020-21 turnover. The deadline for the 2020-21 Self Assessment tax return is 31 January 2022.
• We appreciate that the introduction of the turnover test means that some of your clients may need your support to get ready to claim."

Who's meant to pay for this extra work is of course not specified!

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By Stilltryin
06th Jul 2021 17:28

~

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By Hugo Fair
06th Jul 2021 18:03

I'm not at all sure the "turnover compared to what?" question has been answered.

"The fifth grant will be determined by a turnover test (which) considers how much your clients’ turnover has gone down by in the 2020-21 tax year due to the pandemic."
That's two, potentially contradictory, criteria within one eligibility definition!

It's quite possible for turnover to have increased overall in 2020-21, despite at the same time having decreased 'due to the pandemic' (i.e. from what would have been achieved otherwise).
And vice-versa, it's possible for turnover to have decreased in 2020-21, despite the impact of the pandemic being an increase in turnover from what would otherwise have been an even worse fall off in turnover!

So ... is the eligibility based on meeting BOTH criteria (i.e. a measurable decrease in turnover that is supported by 'evidence' that this has been caused by the pandemic)?

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Replying to Hugo Fair:
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By jonharris999
06th Jul 2021 18:08

@ Hugo - you are right, but I understand this to mean that they are taking it as read (incorrectly, but there you go) that a reduction in turnover in 20/21 compared to 19/20 (or exceptionally 18/19) is per se a reduction in turnover due to the pandemic.

And that if you do not fit this paradigm for any reason, you can't play.

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Replying to Hugo Fair:
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By Hugo Fair
06th Jul 2021 18:09

And one other thing ... the email also states:
"Customers who were not eligible for the fourth grant, will not be eligible for the fifth grant either as we’re using the same tax returns to determine eligibility for both grants."

So, are they now saying that the eligibility criteria for the 4th and 5th grants are identical (despite all the other detail provided)?

They may (or may not) be using the same tax returns to obtain figures used when determining eligibility ... but that doesn't automatically equate to using identical eligibility criteria for the claim.

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By John Stone
06th Jul 2021 20:04

Frankly - I suspect that the person who constructed this guide is blissfully unaware that some businesses have basis periods which don't coincide with the tax year.

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Replying to John Stone:
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By SXGuy
06th Jul 2021 20:41

Exactly this and the guidance is confusing on that basis.

First it says to pick a day between 1st to 6th April 20 and take 12 months of turnover from thst point.

Then it says to compare it to the 19/20 tax return turnover.

But the 19/20 tax return could include turnover from 1st May 18 up to 30th April 19 as an example.

So are we comparing 12 months from April 20 with a tax return that has 12 months of turnover up to April 19 given the above scenario?

What happens to the turnover from April 19 to April 20, is that just ignored?

Either this is badly written or someone's not thought it through, because I can see it being unfair on one hand while also needing to calculate two lots of turnover for 20/21.

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Replying to SXGuy:
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By John Stone
06th Jul 2021 20:50

As things stand we can only speculate what is intended. Clarification required.

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By Duggimon
07th Jul 2021 09:46

This is absolute rubbish, there is no way to determine eligibility for the grant using this guide and it's full of things that are just wrong.

"HMRC will be able to check your figures after you submit your tax return for this period." - how? Only if the tax return is for a period starting between 1 and 6 April.

"You can: refer to your 2020 to 2021 Self-Assessment tax return if you’ve completed it" - even if this is for a period other than one starting between 1 and 6 April?

"If you’re a member of a partnership and have no other businesses
You’ll need to work out and use the partnership’s total turnover figure." - really? So you would just use the whole partnership turnover despite any number of other factors that could cause that to change but has no bearing on your income?

"In most cases, you must use the turnover reported in your 2019 to 2020 tax return as a reference year." - even if this is a different basis period to a year beginning between 1 and 6 April?

This guide is entirely useless for anyone with an accounting year end outside of 31 March - 5 April.

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By fawltybasil2575
07th Jul 2021 10:31

As ever it is the legislation, in this case the new TREASURY DIRECTION (issued 2/5 July 2021) which clarifies. This is a link:-

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

One should look at 6.1 to 6.3 inclusive to remove doubt re determining the “turnover comparison test” (which of course determines whether the “30%” or the “80%” Grant can be claimed). One does indeed have to compare:-

(i) The actual turnover for the 12 months commencing on any date from 1 April 2020 to 6 April 2020, with
(ii) The turnover for the BASIS PERIOD on the 2019/20 Tax Return.

It is of course entirely INCONGRUOUS that, for (ii), the basis period may be (per SXGuy’s example in their post at 20.41 yesterday) 1 May 2018 t0 30 April 2019. In that example case, the turnover for I May 2019 to 31 March 2020/5 April 2020, is indeed completely ignored.

[I am not overlooking the small additional point that one can, if one has a valid reason for so doing, INSTEAD use [for (ii)] the turnover for the basis period on the 2018/19 Tax Return].

I do not seek to defend the rules in the Chancellor’s new SEISS 5 (frankly, the rules for ALL the SEISS schemes from SEISS 1 to SEISS 5 are IMHO ill-conceived; and clearly were introduced without referring to accountants /tax advisors who better understood the implications).

However, I can only assume that the Chancellor was trying to avoid additional work (for the taxpayer and/or their accountant) in determining the ACTUAL turnover for the 12 months from 1 April 2019/6 April 2019. His reason for so doing may be that the taxpayer/accountant WILL have to carry out the exercise [per (i) above] of calculating the ACTUAL turnover for the 12 months commencing 1 April/6 April 2020 (ie that it would be unreasonable to expect the taxpayer/accountant to carry out TWO such calculations).

Basil.

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Replying to fawltybasil2575:
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By SXGuy
07th Jul 2021 11:06

For basis periods spanning two tax years, given the reference period will be actual turnover declared on the previous tax returns,we I guess now face having to look at both 19/20 and 18/19 and pick whichever one is higher than the calculated turnover between 1st/6th April 20 and 31st march/5th april 21.

And the excuse for using 18/19 I guess will be because of the basis period, but you can see from this, how picking the wrong one can lead to either not being entitled or having a reduced entitlement.

Maybe they are hoping this will happen with diy'er as to avoid paying it out.

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By Paul Crowley
07th Jul 2021 14:16

I have so far prepared many fewer tax returns for ye 2021 than would be the norm at this point in the year
Reason is that all subcontractors know that they will be no tax refunds.

Wonder how quickly they will start to come now.

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Replying to Paul Crowley:
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By SXGuy
07th Jul 2021 14:20

If anything it's definitely created a way for us to get all the people putting it off to come in now. That's the only thing I'm happy about.

Currently got around 25 April year ends dragging their heels. I expect come end of July the phone will be non stop ringing.

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RedFive
By RedFive
07th Jul 2021 16:06

I don't think anyone has mentioned yet you have to get over the first qualification question first;

"you must reasonably believe there will be a significant reduction in your trading profits due to the impact of COVID-19 between 1 May 2021 and 30 September 2021"

This rules out the VAST majority of my self employed clients. Doesn't matter what the turnover test shows, that just determines the LEVEL of grant once you pass the first test.

I've had 3 hairdressers email for turnover figures already but they are currently posting record profits and have done since reopening in April. They were not happyu when I explained this. There was NO mention in the HMRC email that landed yesterday about this qualification (along with intend to continue to trade).

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Replying to RedFive:
By Duggimon
07th Jul 2021 16:26

I think it's entirely reasonable to assume cases will start to skyrocket again in a couple of weeks and businesses can expect to operate thereafter at reduced capacity.

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Replying to Duggimon:
RedFive
By RedFive
07th Jul 2021 17:08

I disagree but respect your opinion. It’s over and it’s just the media who are wanting to make you believe otherwise.

Let’s check back in September and see who was right :)

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Replying to RedFive:
By Duggimon
07th Jul 2021 17:30

Bookmarked!

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Replying to RedFive:
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By SXGuy
07th Jul 2021 17:38

Completely agree. Unfortunately media seem fixated on case numbers as opposed to hospitalizations and deaths, and Joe public don't seem capable of understanding the difference.

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Replying to RedFive:
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By jonharris999
07th Jul 2021 18:13

Of course the qualification that @RedFive quotes is the same qualification as Rounds 3 and 4 - reduced because of the crisis compared to how it would have been if no crisis, not reduced in relation to the complex turnover test, as @RedFive correctly says.

I can believe that hairdressers may be doing a normal trade at present, but many others won't be. Lots of hospitality, training and development, creative industries, travel...

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