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SEISS question

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Hi, it's my first question here. Nice to e-meet you all.

A self-employed business that has been impacted by reduced activity, capacity or demand due to coronavirus (made a lot less profit due to covid restrictions), but disposed a business asset selling a part of the business (not stopping the whole trade and paying for it Capital Gains Tax/Business Asset Disposal Relief), still qualifies for SEISS grants? Does this disposal of business asset qualify for SEISS as "Trading profits", "non-trading income" or none of the two?

I've not been able to get an answer on this, hope to have better luck here. Thanks for your help!

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By David Ex
16th May 2021 11:40

ChrisBen wrote:

I've not been able to get an answer on this, hope to have better luck here. Thanks for your help!

Where have you been looking?

https://www.gov.uk/guidance/claim-a-grant-through-the-coronavirus-covid-...

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Replying to David Ex:
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By ChrisBen
16th May 2021 13:34

Many thanks. I am aware of that website, but I have not found a clear answer to this question despite all my efforts. I have asked for it also in some live webinars and on the official community forum, but the operators have always skipped the question. What's your point of view on this?

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By David Ex
16th May 2021 14:41

The word “income” in tax terms is usually distinguished from gains and so that would be my guess.

Your best bet for a definitive answer would be to speak to the accountant who prepares your tax returns as most practising accountants are well versed in all Covid related financial matters.

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By Tax Dragon
16th May 2021 21:43

I'm not sure you are asking the relevant question. You may well be in unchartered waters for most accountants and their knowledge of the law. You've certainly gone beyond my knowledge. Logic though says that no grant should be available in relation to the part of the business that has been sold.

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blue sheep
By Nigel Henshaw
17th May 2021 08:39

There is a clear guidance page here on what HMRC count as trading profits for the purposes of calculating the grant https://www.gov.uk/guidance/how-hmrc-works-out-total-income-and-trading-... so thats a good place to start.

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Replying to NH:
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By ChrisBen
17th May 2021 12:02

Thanks NH and all! You pointed the very page from where I started my journey. They explain very well how they assess the eligibility and amount of SEISS from their side, based on 19/20 and previous tax returns, and I'm totally fine with it. From my side instead, before claiming I have to self-assess my situation based on the facts of year 20/21, and here is where I start to have doubts. Trying to use their same method, do I consider capital gains from this disposal of business asset as (their words) "Trading profits", "non-trading income" or none of the two? Here's really where I'm a bit unsure. They don't mention this case in any of their pages and documents.

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By Mr_awol
17th May 2021 10:59

What type of business asset was sold, how has that led to reduced income, and what were the reasons for the sale?

For example is the client a courier with a motorbike for documents and a van for larger items, and they cant afford the van HP so had to get shot of it? Why couldn't they afford it? Is it because everyone was working from home e-signing stuff rather than using motorbike couriers?

Not that i can be sure the answer will enable us to make a decision - but it might at least rule it out, i guess.

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By Hugo Fair
17th May 2021 12:42

You're not going to get a definitive answer to your core question on this site - partly because I doubt anyone has encountered your exact situation (but mostly we don't know sufficient details of your case - and you probably don't want to try setting it all out here when you could get a meeting with your accountant to sort it out).

FWIW it's unlikely that any transaction you describe as "disposed a business asset" will count as "Trading profits" unless your trade is the buying/selling of such assets ... but it's not that black-and-white.

I suspect the bigger issue may be when you say the disposal was "selling a part of the business" which, as Tax Dragon has flagged, raises the issue of whether you can claim against the ongoing operation of a 'business' that is (partly) not in existence.

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Replying to Hugo Fair:
blue sheep
By Nigel Henshaw
17th May 2021 13:37

Hugo Fair wrote:
<

FWIW it's unlikely that any transaction you describe as "disposed a business asset" will count as "Trading profits" unless your trade is the buying/selling of such assets ... but it's not that black-and-white.

depends on what you mean by an asset, in this context trading profits mean net of capital allowances etc

but I agree I very much doubt we can answer the question without more information

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