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SEISS claim - slightly different situation

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I have a client who has made considerably more profit in 20/21 than he did in 19/20, but has claimed all the grants.
However in 19/20 he was off work for 9 months following a long illness, so profit was considerably down.  Even after the grants he is only just over the tax threshold, so he is down based on 18-19 but up based on 19/20

Looking at the 4 different grants, imo grant 1 is ok as he had no work in April 2020.  Grant 2 should be ok. criteria is affected on or after 13 July. and July was quieter.  I'm ruling out Grant 3 as just under 40% of his income was made in the 3 months from November 2020.  Grant 4 is ok on the 3 month period, as work has dried up in April 2021, but I think you also have to assess the year in total as well, but would that apply to the 20/21 period or  21/22, considering the frant spans 2 tax years?

So, opinions please, am I on the right track with my own assessments?

Would it be worth writing to HMRC and asking for a decision first before submitting the tax return?

Replies (14)

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RLI
By lionofludesch
24th Jun 2021 11:13

I would be using the last normal year as a base for comparison. Not a year when he barely got out of his sick bed.

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By legerman
27th Jun 2021 11:51

lionofludesch wrote:

I would be using the last normal year as a base for comparison. Not a year when he barely got out of his sick bed.

The 9 months should actually have read 5 months, typo on my part, but thanks, that's good to know.

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By legerman
27th Jun 2021 11:51

lionofludesch wrote:

I would be using the last normal year as a base for comparison. Not a year when he barely got out of his sick bed.

The 9 months should actually have read 5 months, typo on my part, but thanks, that's good to know.

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By legerman
27th Jun 2021 11:51

lionofludesch wrote:

I would be using the last normal year as a base for comparison. Not a year when he barely got out of his sick bed.

The 9 months should actually have read 5 months, typo on my part, but thanks, that's good to know.

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By Duggimon
24th Jun 2021 11:28

I don't know how many threads on this can come up before people realise that historic profits, for any basis period, are at best only tangentially related to the test for reduced capacity.

You take what you earned and compare it with what you reasonably believe you would have earned were it not for Covid. If figure 1 is significantly lower than figure 2 (by your own definition of significant for grant 4) then you can claim, providing you're otherwise eligible.

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By jonharris999
24th Jun 2021 15:49

+1

The OP demonstrates how to make a rod for your own back by inventing rules and criteria that do not exist anywhere.

At the risk of repetition (since I've written that on about 100 threads on this topic, I think we can safely say the risk is realised), I wonder how many agents and taxpayers are making the same mistake, and I suspect it is lots.

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By Leywood
24th Jun 2021 16:19

Can understand unrepresented taxpayers getting it wrong. Although technically I have no sympathy with most of them, if they cannot be bothered reading the guidance notes and instead just listen to MDTP.

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By Paul Crowley
24th Jun 2021 16:32

+1
Defendable position if belief was correct at time of claim

Provided belief was reasonable at the time, not with hindsight once it is too late to claim

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By legerman
27th Jun 2021 11:50

Duggimon wrote:

I don't know how many threads on this can come up before people realise that historic profits, for any basis period, are at best only tangentially related to the test for reduced capacity.

You take what you earned and compare it with what you reasonably believe you would have earned were it not for Covid. If figure 1 is significantly lower than figure 2 (by your own definition of significant for grant 4) then you can claim, providing you're otherwise eligible.

Thanks. I was under the impression you compared the previous year. It's good to know it can be compared on a reasonable assumption of what profit would normally have been achievable.

Thanks for all the comments.

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By Hugo Fair
27th Jun 2021 12:53

It's NOT what "would normally have been achievable" ... it's what was believed at the time of the claim would have been achieved without the impact of the pandemic.

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By jonharris999
27th Jun 2021 13:57

+1

And it is surely entirely obvious - so why are so many people having such a hard time getting it? - that 'normal' or 'last year' performance might be one element of a decent measure of that, but only one element of it.

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By [email protected]
04th Jul 2021 10:48

I'm interested in how this will change with the 5th SEISS grant, which requires assessment of the percentage by which turnover has reduced - this implies a comparison, but a comparison with what? eg. for the OP's client, if the comparison is with the previous year, then turnover won't have reduced at all, and they won't be eligible.

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By Hugo Fair
04th Jul 2021 11:03

https://www.gov.uk/government/publications/self-employment-income-suppor...

"The amount of the fifth grant will be determined by how much your turnover has been reduced in the year April 2020 to April 2021.
We’ll provide more information and support from early July 2021 to help you work out how your turnover was affected."

Not that I fully trust all guidance on GOV.UK, but to be fair "more information .. from early July 2021" and it's only 4th July. So I think you may need patience for a few more days!

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By jonharris999
04th Jul 2021 12:12

This was changed last week. It said "late June" until....late June.

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