Share this content

SEISS claims

Client claim to SEISS

Didn't find your answer?

If a client has claimed all three SEISS grants but, upon preparing their 2020/2021 tax return, the month-on-month activity appears unaffected, what is the correct procedure for an accountant to take? 

I intend to remind clients of SEISS elegibility criteria, if the client maintains that they have been adversely affected by Covid-19 and are entitled to all SEISS income claimed, ethically, am I obliged to take matters further? 

Replies (31)

Please login or register to join the discussion.

avatar
By doubletrouble
10th Apr 2021 09:29

Just because their monthly sales seem unaffected does not necessarily mean they have not been adversely affected

Thanks (0)
Replying to doubletrouble:
avatar
By DaveyJonesLocker
10th Apr 2021 10:58

So what criteria do you use then?

Thanks (0)
Replying to DaveyJonesLocker:
avatar
By doubletrouble
10th Apr 2021 10:59

DaveyJonesLocker wrote:

So what criteria do you use then?

Profits??

Thanks (0)
Replying to doubletrouble:
avatar
By BayTree
10th Apr 2021 11:24

The client I am considering has a business with two related but distinct streams of income.
Without doubt, one income stream has been adversely affected by Covid-19 but the other has not.
For the business as an entirety, total sales are up, total costs are slightly down, total profits are up.

Thanks (0)
Replying to doubletrouble:
avatar
By BayTree
10th Apr 2021 11:19

Hi Doubletrouble.
I have since edited the post to read 'activity' as opposed to 'sales'.

Thanks (0)
avatar
By BayTree
10th Apr 2021 11:29

To rephrase my original post.
Going forwards, if an accountant believes a client has incorrectly claimed SEISS, is there any ethical, moral or legal obligation for the accountant to report the client to HMRC?

Thanks (0)
Replying to BayTree:
avatar
By SXGuy
10th Apr 2021 12:42

That's a slightly different question to the opening one is it not?

Did the client at the time of claim believe they would be adversely affected? If the answer is yes, there's nothing else to say.

Just because it transpires they wasn't, doesn't mean they didn't claim correctly.

Thanks (0)
Replying to SXGuy:
avatar
By Paul Crowley
10th Apr 2021 18:47

Agree
It was decision to be made on the day

No opportunity to claim later on when it turned out that there was a second lock down or that clients were refurloughed and cancelled orders

No requirement to return money if future income exceeded reasonable expectation

Thanks (0)
avatar
By Hugo Fair
10th Apr 2021 14:43

I really don't want to get embroiled in this topic for the nth time (it is the weekend after all), but OP says "client has claimed all three SEISS grants" ... whereas most of the respondees to-date have referred to the (woolly) guidance that existed at the time for only the first two rounds of SEISS.

The guidance (and the SI) for round three was substantially better quantified and will be used by HMRC more rigorously when/if enquiring into the validity of a claim for it (or indeed for round four) - see separate posting today at https://www.accountingweb.co.uk/any-answers/heads-up-re-seiss-4-treasury...

Of course none of this helps OP's central dichotomy ... where to draw the line with regard to an accountant's need to 'question' the validity of any claims being reported in accounts he/she is preparing. But my point is that this question will at least be easier (not easy) to resolve for round 3 and onwards of SEISS.

Thanks (2)
Replying to Hugo Fair:
avatar
By jonharris999
12th Apr 2021 07:14

I agree, Hugo.

Also, while I hate to say "I told you so"....

Thanks (0)
avatar
By legerman
10th Apr 2021 15:43

One of my clients has traded throughout the year and there appears little change from last year. I'm waiting to hear from him whether SEISS grants have been claimed, and if he has I suspect he hasn't been affected.

BUT as Hugo Fair points out, the criteria has been woolly to say the least, and is very much open to interpretation.

I'm staying out of it, it's not for me to decide whether they were affected or not.

Thanks (1)
Replying to legerman:
avatar
By DaveyJonesLocker
10th Apr 2021 15:55

Yes I’m just entering the amounts on the tax return in the “correctly claimed”box. Up to hmrc if they want to look into it

Thanks (4)
By Duggimon
12th Apr 2021 11:17

If HMRC wanted agents determining the validity of claims they could have let us get involved in the process. We were definitively shut out of it though so I would say just report what was claimed and move on.

If you think your client has categorically defrauded HMRC, such as claiming for a trade that had ceased, that'd be different but I'm not going to assess eligibility of all my clients, HMRC didn't want us doing it up front so I'm not going to do it now. They have the figures, they can do it themselves.

I don't think the regulations are precise enough for a situation like the OP's to constitute a MLR reporting obligation, based on the information we would typically have available.

Thanks (1)
avatar
By Tax Dragon
12th Apr 2021 11:40

I'm getting as bored as Hugo of this topic. Does no-one who posts a question on here, especially a question about a hot potato like this, ever think "oh, I wonder if someone else has posted about this this week"?

FA2020 Sch16 puts the ball in the accountant's court. Ignore it if you like. But it's a risk - and Jon did tell you so.

Thanks (0)
avatar
By AthollAccounts
14th Apr 2021 09:17

The criteria for the first grants was so vague there just had to be an adverse affect so even a slight dip in income or profits met the definition. They qualified if they had to spend on PPE or anything else covid related too.
The claimant had to tick a box to say they had reviewed and kept evidence of the effect, if you're unsure ask them about it

Thanks (0)
Replying to AthollAccounts:
Kitten
By Hazel Accounts
15th Apr 2021 00:44

For the first (and second) grant "adversley affected" didn't even necessarily mean you had to show a dip in income/profits. You could have claimed if your profits were the same as before but that they would have been higher if covid hadn't happenned. You would have to be able to demonstrate why your businesses growth did not happen due to covid but that could be easy if say a large new contract cancelled.

Thanks (0)
avatar
By Tax Dragon
15th Apr 2021 07:09

It sounds as if the client that prompted BayTree's question benefitted overall from the emergency. We have clients that definitely benefitted.

Am I wrong in thinking that you have to look at the overall impact on the business? Someone mentioned that a need to buy PPE was enough of itself to mean the business was adversely affected. But not buying PPE could have meant that our client's business might have been trashed; instead, buying PPE enabled it to thrive. So I struggle with the PPE argument. (And I'm now wondering whether the particular client I have in mind could have claimed when in fact they didn't.)

Also, you obviously have to consider each grant separately for the purpose of the Sch16 charge. What's not clear to me is whether you take account of the first grant in considering the adverse effects existing at the time of the second. Is receipt of the first grant a favourable business effect when you come to consider the second?

Thanks (0)
Replying to Tax Dragon:
avatar
By jonharris999
15th Apr 2021 07:29

In your middle paragraph you put your finger on the problem of "adverse effect" being a stunningly crap piece of law. We'll have to wait for some HMRC challenges I suppose.

Is your last question answered by this sentence of the guidance - ?

"You do not have to consider any other coronavirus scheme support payments that you have received when deciding if you’ve had a significant reduction in your trading profits."

I read that to mean = in all your judgement calls, ignore any support payments. Although there's yet another ambiguity - does "other" mean "payments other than the grant you are now considering eligibility for" or "payments from support schemes other than SEISS" ?

Unless I've missed something, the Directions appear silent on this point.

Thanks (0)
Replying to jonharris999:
avatar
By Tax Dragon
15th Apr 2021 09:25

Thanks Jon. Was that sentence from 3+4 guidance or 2 as well?

"Adverse effect" wasn't the test (as I understand it). The question is whether "the business ...[had] been adversely affected". That's my point. You look at the business as a whole. PPE just don't enter into it.

Thanks (0)
Replying to Tax Dragon:
avatar
By jonharris999
15th Apr 2021 13:00

Tax Dragon wrote:

Thanks Jon. Was that sentence from 3+4 guidance or 2 as well?

"Adverse effect" wasn't the test (as I understand it). The question is whether "the business ...[had] been adversely affected". That's my point. You look at the business as a whole. PPE just don't enter into it.

From memory it wasn't in round 2. It's from the present 4.

Thanks (0)
Replying to Tax Dragon:
avatar
By jonharris999
15th Apr 2021 13:02

Tax Dragon wrote:

Thanks Jon. Was that sentence from 3+4 guidance or 2 as well?

"Adverse effect" wasn't the test (as I understand it). The question is whether "the business ...[had] been adversely affected". That's my point. You look at the business as a whole. PPE just don't enter into it.

From memory it wasn't in round 2. It's from the present 4.

Thanks (0)
Replying to jonharris999:
By Duggimon
15th Apr 2021 10:34

jonharris999 wrote:

"You do not have to consider any other coronavirus scheme support payments that you have received when deciding if you’ve had a significant reduction in your trading profits."

That is an astoundingly stupid sentence to put in the guidance.

A business who has furloughed staff will have a big reduction in trading profits if they count the wages of those staff and not the CJRS claims, despite, potentially, minimal impact on profitability of the actual business.

I'm reasonably sure that doesn't match the legislation.

Thanks (0)
Replying to Duggimon:
avatar
By jonharris999
15th Apr 2021 12:59

Indeed, and I'm far from wanting to defend HMRC here - just to say that I guess that they guess that not that many self-employment businesses (this being the SEISS guidance of course) will have had significant CJRS. But you are right that even a modest amount of CJRS for say one assistant would have been worth considering when they wrote this.

Thanks (0)
avatar
By fawltybasil2575
15th Apr 2021 10:13

@ Tax Dragon (your 7.09 post) and jonharris999 (your 7.29 post).

(1) PPE. Your query, TD, relates only of course to SEISS 1 and SEISS 2. The answer to that query lies in Para 3.3 of SEISS 1 (that condition applies also in SEISS 2, by virtue of Para 3 of SEISS 2) ie:-

“3.3 A claim may only be made in relation to a trade the BUSINESS (emphasis added) of which has been adversely affected by coronavirus or coronavirus disease”. Impliedly “adversely affected” must mean “adversely affected OVERALL” One therefore does NOT consider the PPE expenditure in ISOLATION, but whether, overall, coronavirus has itself had an adverse financial effect.

If therefore, for example, a hairdresser’s takings remained the same as they would have been had coronavirus not impacted on us, but that hairdresser had to pay £250 in PPE, then a SEISS 1 or SEISS 2 claim would have been valid (each claim period is considered separately). The only possible caveat to that point lies in Para 3.4 of SEISS 1, which advises that claims must not be “abusive” (one could form the view, albeit I would not agree such view, that if the PPE expenditure were only say £25, then the £25 being negligible, the claim would ipso facto be “abusive”).

(2) As regards, jon, whether one should consider one’s having received (say) a SEISS 2 Grant, when considering a SEISS 3 Claim, the answer is “NO”. The key to that answer lies in the fact that EACH SEISS claim is legally separate (there is no concept, legally, of SEISS income being regarded as an amorphous mass).

[As the legendary Jimmy Armfield would have said, on his expressing his views on a particular aspect of a live football match, "but that is only MY opinion"].

Basil.

Thanks (0)
Replying to fawltybasil2575:
avatar
By Tax Dragon
15th Apr 2021 10:46

Thanks Basil.

As usual, I think you are addressing the nub of the matter. And I agree - the test is whether the business itself was adversely affected. (Arguably - and I suspect if and when this goes to court, the courts will decide that - it is two tests: was business affected? Was the overall effect adverse?)

I think we all agree that clarification is needed. But it's unlikely to be available before we have to submit returns. So this is a real issue.

I note in your example marked for my attention, you say SEISS 1 OR SEISS 2 (emphasis added). I think claiming both for a £250 spend would be seen as abusive. Whether the spend justified either claim... well, I note your advice and acknowledge that your views have a certain 'weight' to them. I suspect I am duty bound to apply that view, if I'm honest. But I won't be 100% surprised if, in time, such arguments turn out to represent an incorrect view of the law. (Not because of your abuse caveat: simply because a £250 spend on safety equipment does not affect the BUSINESS at all.)

Thanks (1)
Replying to Tax Dragon:
avatar
By Hugo Fair
15th Apr 2021 12:59

I'm aware that I'm walking into the arena already occupied by the big beasts, but ...

At the most basic level, there's no quantification of "adversely affected" so here's a question:
* My dentist remained open during the various degrees of lockdown and tier-dom, but spent a fortune (his word) on extra measures - not just PPE but extra staff for deep cleaning, bigger gaps between appts and so on - whilst taking in fewer clients.
* So obviously adversely affected?
* But he increased his hourly rates and applied a 'protective' surcharge on top, with the stated intention of retaining both his income and his profits.
* So obviously NOT adversely affected?
* But he has probably pi88ed-off some long-term (and highly profitable elderly) patients, who may not return to his lists.
* So back to adversely affected (albeit not in current trading period) ...

No doubt others can come up with similar (or even more convoluted) stories of how each business has tackled the conditions - but without clear quantification who is to say whether the net result = adversely affected.
[BTW I've no idea whether my dentist claimed SEISS or any other grant].

Thanks (1)
Replying to Hugo Fair:
avatar
By jonharris999
15th Apr 2021 13:05

The view of this small beast is that your excellent example, @Hugo, is the perfect demonstration of why cases that HMRC takes up here will be very, very small in number - the premise on which my original thread about the 'incorrectly claimed grants' section being a huge, useless waste of time, paper tiger etc.

Thanks (0)
Replying to Hugo Fair:
avatar
By Tax Dragon
15th Apr 2021 14:44

At least you are considering the specifics of the individual business, Hugo. You're mucking in. You're thinking of the issues.

My dispute (if that's what it is) is with the Pontius Pilates who wash their hands and think they have no responsibility to get their clients' tax returns correct.

BTW, your dentist didn't claim the payments.

Thanks (0)
Replying to Tax Dragon:
avatar
By Hugo Fair
15th Apr 2021 15:36

Your "BTW, your dentist didn't claim the payments" initially had me preparing to sweep the Study for bugs and/or CCTV devices ... until I realised that it wasn't based on having identified my dentist, but on the likelihood that he's ineligible for SEISS.
TBH I've no idea as to his employment status (partner in the dental practice would be my guess) ... but thanks for the encouraging words!

Thanks (0)
Replying to Hugo Fair:
avatar
By Tax Dragon
15th Apr 2021 16:14

Hugo Fair wrote:

based ...on the likelihood that he's ineligible for SEISS.

There is a bug, but not one you can sweep for. (Before you get paranoid, I should explain... it appears I have been infected by the Aweb guessing bug.)

Thanks (0)
Replying to Tax Dragon:
avatar
By Hugo Fair
15th Apr 2021 17:44

Well, that's fine ... I've never bothered to cloak my identity (more from laziness than any conceit) - although I suppose it now means that I'll have to treat any puff of smoke that I encounter on my peregrinations with wariness, in case you're lurking unannounced!

Thanks (0)
Share this content