SEISS and VAT Registration

Do SEISS grants count towards the VAT registration threshold?

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Apologies in advance if this is a stupid question, I have been working in industry since the start of the pandemic and there are so many changes due to COVID that I'm only really on top of the ones that apply to my current field.  A colleague has asked a question regarding her husband.  He is a self employed joiner who is usually operating below the VAT registration threshold, although I believe his turnover is relatively close to the threshold (say £80k compared to a threshold of £85k - I don't have exact figures).

He applied for SEISS grants due to not working for much of the lockdowns as clients didn't want him in their homes whilst COVID was rampant and as such turnover (and profit) took a significant downturn.  He still took any work he could take, but the majority of his work dried up.  Since then, business has really picked up and people are suddenly wanting lots of home improvements.  He is now in the position where he is likely to breach the VAT turnover threshold in the next month if he includes the SEISS grants as turnover, but will still be below the registration and de-registration thresholds if he doesn't include SEISS grants in his turnover.

I cannot specifically see guidance on HMRC relating to SEISS grants and the VAT turnover threshold.  Maybe I'm looking in the wrong place?  I am aware that the VAT registration guidance states "taxable supplies" and I do not believe that the SEISS grants would count as taxable supplies and therefore I don't believe he needs to register as when SEISS is excluded, his turnover is below the threshold.  Can anyone confirm if I am correct and if possible point me in the right place for guidance?  He is one of those rare honest tradesmen who is keen to get everything right.

Replies (5)

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By Truthsayer
22nd Jun 2021 10:27

SEISS is not a supply of vatable goods or services, so it does not count towards the VAT registration threshold. It is taxable for IT/NI purposes, but that does not mean it is turnover.

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VAT
By Jason Croke
22nd Jun 2021 10:29

For VAT to apply, we generally need a supply of something in return for money. With a SEISS grant, we have the money side of the equation but we don't have any supply of anything. It is money with nothing required in return.

Grants are often deemed to be non-business and do not count towards the VAT registration threshold.
https://www.gov.uk/hmrc-internal-manuals/vat-supply-and-consideration/va...

There is also this reference in the HMRC community forums, where HMRC states the SEISS grant does not count towards taxable threshold.
https://community.hmrc.gov.uk/forums/customerforums/sa/1e86b15e-0de2-ea1...

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By Paul Crowley
22nd Jun 2021 10:29

Agree
No supply made

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By rocket_queen
22nd Jun 2021 10:47

Thank you! I was pretty sure that was the case, but as I wasn't completely sure I wanted to check.

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RLI
By lionofludesch
22nd Jun 2021 12:20

I vote no.

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