SEISS 5th grant

Client wants to get accounts more up to date

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I have a client who has been on a 30th April year end for many years and would really like to change this to 31st March/5th April but up to recently has always had too much income to make this worthwhile, even after deducting overlap relief.

Due to the Covid lockdowns, her income in the year to 30th April 2021 is much lower and so I have suggested we add the 11 months to 31st March 2021 to the year ended 30th April 2020 and when overlap relief is claimed she will have less tax to pay.

She qualified for the first three SEISS grants but does not qualify for the fourth, as her taxable profit in 2019/2020, based on the year to 30th April 2020 (and the average for the four qualifying years) is just over the £50k threshold.  However, she would like to claim the 5th grant which I gather is to be based on her 2020/2021 turnover and with 23 months of income included in the tax return it seems she will not qualify.  I know full details of the conditions have not yet been released but what do others think?

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By Paul Crowley
28th Apr 2021 11:18

If not qualifying for 4th grant will not qualify for 5th is my understanding.

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By Duggimon
28th Apr 2021 12:11

It seems unlikely the fifth grant will be based on the 2020/21 tax return when the deadline for filing that return us January 2022.

Or has my brain disengaged?

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Replying to Duggimon:
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By Homeworker
28th Apr 2021 12:34

Duggimon wrote:

It seems unlikely the fifth grant will be based on the 2020/21 tax return when the deadline for filing that return us January 2022.

Or has my brain disengaged?


All I can think of, and have suggested to my client, is that they will accept a declaration that the income was lower when the claim is made but will check the position when the tax returns have gone in. I cannot see any way that they can check, other than against a tax return, which means she is not going to qualify.
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By fawltybasil2575
28th Apr 2021 13:12

@ Homeworker (OP).

I note your sentence:-

“However, she would like to claim the 5th grant which I gather is to be based on her 2020/2021 turnover and with 23 months of income included in the tax return it seems she will not qualify”.

Most importantly, the SEISS 5 legislation is still awaited. The Chancellor has indicated that the rules will represent a “sea change” inasmuch as he states that one will ONLY have to consider the Turnover for 2020/21 in COMPARISON with the Turnover for 2019/20. For SEISS 1 to 4, the rules required AN ENTIRELY DIFFERENT comparison – ie one had to make the comparison not with the previous tax year but with what the Profits or Turnover (SEISS 1 and 2 Profits; SEISS 3 Turnover) WOULD HAVE BEEN if the business had not been adversely impacted by Coronavirus.

In simple terms the SEISS 1/2/3 rules were (albeit they have been misunderstood by many) based on an attempt at FAIRNESS. The GOV.UK guidance for SEISS 5 (albeit we still await the legislation) abandons any attempt at fairness, and applies a “broad brush” approach which bizarrely IGNORES all the other factors (ie the “non-Coronavirus” factors) which might have impacted on the reduction (or increase) in Turnover from 2019/20 to 2020/21.

There is indeed no indication thus far on how the 2019/20 and 2020/21 Turnover figures will be calculated, for SEISS 5, if the accounting periods do not end on 31 March/5April. One might be required to apportion Turnover figures between periods before and after 31 March/5 April, or perhaps time-apportionment may be necessary (which, for some businesses would be fair, but for many other businesses would be ludicrous).

To return to your sentence as above: this appears to imply that, for SEISS 5, the client’s Turnover for 2020/21 will be based upon 23 months – this would be irrational of course and HIGHLY UNLIKELY.

Overall, frankly I would certainly NOT be submitting the 2020/21 Tax Return until the legislation for SEISS 5 is on the statute book (ie in case the legislation, for the reasons outlined above, results in your client's being ineligible for SEISS 5 purely due to irrational legislation).

Basil.

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Replying to fawltybasil2575:
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By Homeworker
28th Apr 2021 15:15

I will certainly be waiting until the position is clearer (although I had hoped to retire this summer!).

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