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SEISS on tax returns, have I got this right?

SEISS tax return boxes

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HMRC has had a time of it setting out where the CV grants are to be shown on the latest tax returns.

On the full tax return (not the short one which cannot be downloaded and is only used via the HMRC web site) there is box 20.1 on page TR8 (the rounding up and signing page) which asks for ‘x’ if grants were received and are now ‘included as taxable income when calculating profits in the period of this return’.

However, some people use an accounting year other than 31 March/5 April and will have received the grants after the year end reported in their tax return (say if they still use 30 April as their year-end).

The FA2020 Act Sch. 16 says ‘...CV support payment ... is a receipt of a revenue nature for income tax purpose... and is to be brought into account in calculation the profits of that business’. (Since then, In response to the ongoing CV situation there is an amendment to the FA2020  tabled for the FA2021 to say that grants are taxable in the year of receipt!)

So, following the HMRC notes for completion of the full tax return box 20.1 is to be completed to sweep up all the grants as ‘been included as taxable income in the relevant boxes of this tax return for the purposes of calculating your profits’.

For the self-employed this is covered by: Box 15 Your turnover ‘do not include CV support payments in box 15 (see box 16 and box 70.1).

So on to Box 16 ( headed) Any other business income (include CV support payments such as CJRS but not SEISS), brackets by HMRC. So not turnover but specific grant income CJRS, Eat out THO and any other HMRC, local authority or devolved admin. but not SEISS go in here and these then contribute to the taxable profit calculations.

On we go to: Box 70.1 SEISS Include the amount you were entitled to regardless of the dates your books or accounts were made up to.

So, we have got there with jumping out of and into 4 boxes.

If you also have Furnished Holiday lettings, box 20.1 remains relevant but the notes to the UK property pages have: Box 5 Income ‘If you received CV support scheme payments, include in box 5 the amounts you received’. (So, no separate SEISS box)

 

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By Duggimon
13th Apr 2021 16:55

SEISS goes in if received in the tax year, everything else goes in matched with the period to which it relates.

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By ourpetsheadsarefallingoff
14th Apr 2021 10:15

This seems odd, doesn't it? This will result in a very high tax bill next January for those with early year ends, as they'll be paying tax on profits to say 30 April 2020 (which will be largely unaffected) plus SEISS received in 2020 to cover the lost profits for the year to 30 April 2021.

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By Hugo Fair
14th Apr 2021 11:28

Odd? That depends on your subjective viewpoint, but the legislation is clear (see several other recent threads here).

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By ourpetsheadsarefallingoff
14th Apr 2021 12:06

Not questioning the legislation, just the thinking behind it - entirely subjectively.

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By Hugo Fair
14th Apr 2021 14:03

Understood - and my fault for being flippant.
My suspicion is that, although the legislation drafters are probably as daft as hinted at by Basil, your comment "This will result in a very high tax bill next January for those with early year ends" could be exactly what was in their minds. A means of getting back as much as possible, and as soon as possible, money for the Treasury.
One should never confuse tax legislation with fairness (or often logic).

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By Paul Crowley
14th Apr 2021 15:36

No
It was just a simple solution that can easily be checked.
Otherwise needs a human to figure out all the daft dates people choose. I have one as 23 May. And he is a subcontractor to boot.
Anyone with an April 30 date should know full well that they pay tax a year later than most others with tax year dates

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By fawltybasil2575
14th Apr 2021 12:42

@ ourpets . . . (your posts above).

(1) I agree your comments re the "oddness" of the regulations. I would go further and state that I cannot readily see any VALID reason why the regulations could not have prescribed that the SEISS Grants be added into the Self-Employment profits for the accounting period. I foresee relatively large problems due to the (IMHO) incongruous regulations not being correctly applied, by taxpayers and their agents, on Tax Returns.

I surmise that the real reason (which would be an INVALID one) is that the Chancellor and/or his henchmen assumed that most or all businesses have an accounting year-end of 31 March or 5 April. In identical vein the (albeit the relevant SEISS 5 Treasury Direction is still awaited) guidance re SEISS 5 received thus far refers effectively to a fall in turnover in the year to April 2021 in comparison with the corresponding turnover in the previous year to April 2020 - taken at face value this guidance will require reconciling those gross income figures with the gross income figures for the accounting years, which might not be a simple exercise in many cases – given the “cliff edge” aspect of the “30%” turnover reduction principle in the current SEISS 5 guidance, I would advise the Chancellor to re-think his proposed SEISS 5 calculation intentions.

(2) The iniquity to which you refer can be avoided, in the greater majority of cases, by extending the accounting year-end. I emphasise “greater majority” – certainly not ALL, as Overlap Relief figures might reflect a (potentially large) increase in annual profits in the time which has elapsed since the (potentially very many years) period on which that Overlap Relief figure was based. In addition, of course, it may be confusing to the client to prepare accounts for an extended period (and/or be impractical to extend the year-end).

Basil.

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By Paul Crowley
14th Apr 2021 15:39

Not got many odd dates left and mostly getting on in years
But good reason to tidy up the loose ends where possible

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