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Self employed grant - allowed to continue trade?

Are self employed workers allowed to continue their trade and still qualify for the 80% grant?

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Is a sole trader actually required to cease trading to be eligible for the new Self-Employed Income Support Scheme? I have just read the transcript of the chancellors speech:

www.gov.uk/government/speeches/chancellor-outlines-new-coronavirus-suppo...

"You'll be able to claim these grants and continue to do business." No mention of needing for there to be a cessation of trade. 

I'm not sure claiming and working is in the spirit of these measures but I'm sure I will be asked by a client if they can claim and trade at the same time. What are anyone else's views on this? Also, if there is no requirement for the trade to have stopped, presumably all self employed claims will be for the whole 3 month period therefore from March 1st???

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By Matrix
28th Mar 2020 14:50

That is also my understanding. I assume if there is no loss of income then a grant would have to be repaid but we don’t have the details yet do we.

Contrasted with a furloughed Director who can’t work.

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By johnny fartpants
28th Mar 2020 14:59

He also said "The government will pay self-employed people, who have been adversely affected by the Coronavirus, a taxable grant worth 80% of their average monthly profits over the last three years, up to £2,500 a month"

so presumably some proof of loss of earnings will be required?

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Replying to johnny fartpants:
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By lionofludesch
28th Mar 2020 15:19

I wondered about that myself.

Though I suspect that most businesses outside certain "essential" trades, food, toilet roll sales and the like, will suffer.

I personally expect to have little or no income in the next few months. Many folk will delay bringing in their stuff and those to whom I issue bills will struggle to pay them. Whether, ultimately, I see bad debts remains to be seen. I would imagine most self employed folk are in similar positions.

We must wait and see - as usual.

As a matter of policy, presumably the Government wants the self employed to keep the businesses ticking over so that they're ready to go when normality arrives - however long that may take. But it doesn't seem to have a similar plan for companies.

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Replying to lionofludesch:
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By sammerchant
01st Apr 2020 10:45

I expect the VAT Returns will make the activity (or lack of it) clear for most of us.

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Replying to sammerchant:
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By lionofludesch
01st Apr 2020 10:56

Will it ?

Might be too late by then,

Returns submitted 7th April - not affected.

March returns only affected a bit, information not submitted until May.

And so on .... the information might not filter through for months. And that's if it's not masked by all the companies still working at full strength.

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By richardgolding
28th Mar 2020 15:36

The proof of earnings (net profit before tax) will be taken as the average from the last 3 years' Self Employed tax returns (or however many are available up to 3 years); latest being for the 18/19 tax year (filed Jan 20) - up to a limit.
Listening to Martin Lewis (who has regular dealings with The Treasury), he said that Self Employed can continue to work.

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Replying to richardgolding:
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By johnny fartpants
28th Mar 2020 19:32

Thanks Richard. Yes, I have seen Martin Lewis' podcast and he does confirm this to be the case. Thanks for the response. Very helpful

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Replying to richardgolding:
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By lmtch938
01st Apr 2020 11:33

Hi Richard do you think net profit or net profit for tax purposes? Thanks

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Replying to lmtch938:
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By lionofludesch
01st Apr 2020 12:27

lmtch938 wrote:

Hi Richard do you think net profit or net profit for tax purposes? Thanks

To which of these will HMRC have access ?

I think this will answer the question.

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Replying to richardgolding:
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By sammerchant
02nd Apr 2020 11:47

All of them can't. I have clients who are in the Entertainment field who are now sitting on their hands, without income. How will they be dealt with?

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Replying to sammerchant:
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By fawltybasil2575
02nd Apr 2020 12:02

@ sammerchant.

Stepping gingerly into Richard's shoes, may I again (see my post below in this thread) provide a link to the guidance, which is here:-

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

See especially the bullet points in the "Who can apply" paragraph. Crucially, the INTENTION to continue working is the key to your clients' position, and they will qualify for the Grant if all the bullet points are adhered to.

["Can", in the context of the guidance, means "are allowed to" - the fact that they "can't" work, in the context of being unable to work because they cannot FIND the work, is not the correct interpretation of the guidance].

I trust this gives you the assurance which you impliedly seek.

Basil.

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Replying to fawltybasil2575:
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By ComanCo
02nd Apr 2020 12:28

In my understanding there is a simple distinction:
To claim the Coronavirus job retention scheme, an employee cannot be working for their employer.
However, to claim the Self-Employed Income Support Scheme, a sole trader (or partner) can work.
In this respect, there is an inconsistency between the two grants. It is probably because, once lockdown is lifted, employers would use employment law to oblige their staff back to work. By contrast with employees, it is an administrative quagmire for HMRC to trace the monthly income of a sole trader.
Many sole traders will get £7,500 in June and can work to their hearts content.

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Replying to fawltybasil2575:
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By sammerchant
02nd Apr 2020 13:05

Thanks. Their work has been cancelled.

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Replying to sammerchant:
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By fawltybasil2575
02nd Apr 2020 14:01

@ sammerchant (your last post above).

Forgive me but I'm not sure what point you are making by saying that the work has been "cancelled". Should I interpret this to mean that your view is that the clients are not entitled to the Grants ? If so, please advise me why you are of such view.

Basil.

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Replying to fawltybasil2575:
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By sammerchant
03rd Apr 2020 13:10

If all the theatres and concert halls are closed, the promoters have cancelled the events. Thus, the entertainers cannot work at their chosen profession. Moreover, they will miss out on the income they would have enjoyed (more than £2,500 per month) and, because of the social distancing rules may not get together with others to try something else.

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Replying to sammerchant:
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By lionofludesch
03rd Apr 2020 13:29

sammerchant wrote:

If all the theatres and concert halls are closed, the promoters have cancelled the events. Thus, the entertainers cannot work at their chosen profession. Moreover, they will miss out on the income they would have enjoyed (more than £2,500 per month) and, because of the social distancing rules may not get together with others to try something else.

A lot of folk are in that boat. I have folk in the construction industry who can't work in customers' houses because of social distancing or - indeed - because builders merchants are closed. Taxi drivers cannot socially distance. Your clients are not some sort of special case.

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Replying to sammerchant:
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By fawltybasil2575
03rd Apr 2020 13:52

@ sammerchant. Since your post (at 13.10 today) raises an important point of principle, and to avoid its being "lost" in the middle of this thread, I shall post again at the end of this thread, with more detailed comments, in under half an hour.

Basil.

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Replying to fawltybasil2575:
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By sammerchant
04th Apr 2020 09:52

No; the venues have followed the guidance issued by HMG and closed them to the public. The shows are therefore 'cancelled' without postponement, as there are various other bookings at the venues going into 2021.

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By fawltybasil2575
04th Apr 2020 11:16

@ sammerchant.

I must respectfully ask you to consider my substantive reply, to your previous post, at 14.16 on 3 April 2020 (below). The fact that these particular "shows" are "therefore 'cancelled' without postponement" does NOT of itself invalidate an application under the Scheme.

As I have endeavoured to explain in my 14.16 post, the key is whether there is ANY intention to continue ANY trading at ANY time in 2020/21.

Basil.

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Replying to fawltybasil2575:
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By sammerchant
04th Apr 2020 15:58

I think we are both saying the same thing. If the taxpayer has lost his livelihood as a direct result of the pandemic, he should be entitled to claim. The other restrictions (>£50,000, dividend income etc) then come into play. Do you agree?

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Replying to sammerchant:
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By fawltybasil2575
04th Apr 2020 17:48

@ sammerchant.

You say:-

"If the taxpayer has lost his livelihood as a direct result of the pandemic, he should be entitled to claim";

and (if I understand you correctly) you then ask whether I agree that such loss of livelihood ITSELF renders the claim valid.

Unfortunately, I do NOT agree: as I have endeavoured to point out, at the outset in my original post above (and subsequent posts both above and below) ALL FIVE of the bullet points to which I referred in my first post must be complied with, before one THEN considers the other requirements (which you refer to as "£50,000, dividend income etc").

Forgive me if I have not made myself clear, but you have more than once emphasised that your clients' expected entertainment
self-employment activities had been cancelled (and would not be reinstated) leading me to believe that your VIEW was that such cancellations would, ipso facto, invalidate their claims under the SEISS.

I have sought to reassure that, assuming the OTHER requirements were adhered to, such VIEW was incorrect, since the 4th bullet point requirement was that the intention to carry out ANY work in 2020/21 in the existing self-employment would fulfil that requirement.

Basil.

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Replying to fawltybasil2575:
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By sammerchant
05th Apr 2020 11:25

Sorry. There was never any question of cessation and I had not mentioned it. These are young people with a large part of their working lives ahead of them. They are highly qualified at what they do and would not even consider switching careers/professions.

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By lionofludesch
05th Apr 2020 12:02

I don't see your problem.

They'll be able to claim their 80%. Maybe not as much as they hoped to earn but they're no different to any other self employed. They're no special case.

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Replying to lionofludesch:
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By sammerchant
06th Apr 2020 09:31

Of course. I intend to pursue a claim because, in my opinion, they are eminently entitled. After the lockdown, it may take a while, but. hopefully, they should be able to work again. I am not sure what it was I wrote that conveyed the idea that they did not qualify. Only the shows that were planned for the lockdown period have been 'cancelled' and the public will/had have their tickets refunded or substituted as they wish.

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By fawltybasil2575
02nd Apr 2020 12:17

Duplicate.

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By lionofludesch
02nd Apr 2020 12:14

sammerchant wrote:

All of them can't. I have clients who are in the Entertainment field who are now sitting on their hands, without income. How will they be dealt with?

"May", "can" - often confused.

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By memyself-eye
28th Mar 2020 15:43

How would anyone know if the SE continue to trade or not? It's not lie employees who have a weekly or monthly return under PAYE. The SE just state what their income is over the period.
A good deal for those SE who qualify but with caveat that this Govt money will be taxable income -so not a 'grant'

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Replying to memyself-eye:
By Duggimon
01st Apr 2020 11:22

Lots of grants are taxable, being taxable doesn't stop it being a grant, money for nothing is a grant whether it's taxable or not.

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Replying to memyself-eye:
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By gcg007
01st Apr 2020 16:32

Number 3 in the 26 March guidance states ....

Who can apply

'are trading when you apply, or would be except for COVID-19.'

As the portal will not be open for a few weeks I think self employed can continue to trade and receive the grant.

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By fawltybasil2575
28th Mar 2020 16:08

The current guidance from GOV.UK is here:-

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

(1) The guidance refers to the "next 3 months", generally taken to be the 3 months from 1 April 2020 [as opposed to the possible pedantic alternative interpretation of 3 months from 26 March 2020 (the date of the guidance)]. It is however NOT 3 months from 1 March 2020, that date being relevant only to the corresponding Grants to employers re their employees).

(2) There is no restriction on the amount of self-employment work which one can undertake. The Grant is of a "broad brush" nature.

Many self-employed persons will find that it is substantially insufficient to cover their losses, but many ( I would surmise a much lower number of persons) will benefit hugely if their profits are only minimally reduced as a result of the virus (the only requirement in that respect is that one's profits have been adversely affected by the virus, ie to ANY extent - frankly, the vast majority of businesses will find that profits have been adversely affected, to a greater or lesser extent). The business must NOT cease (indeed, the Grant is not receivable if it ceases).

Basil.

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Replying to fawltybasil2575:
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By johnny fartpants
28th Mar 2020 19:38

Thanks Basil. I notice that HMRC will be making the calculations. I wonder if they go for the easy option and use taxable income (i.e. after annual investment allowances) rather than trading profits. I have a self-employed lorry driver who won't be too happy if that is the case! I guess we will need to wait & see.

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Replying to johnny fartpants:
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By jcace
29th Mar 2020 00:44

Let's hope they stick to what the guidance says and use trading profits:
"Have trading profits of less than £50,000 and more than half of your total income come from self-employment. This can be with reference to at least one of the following conditions:
Your trading profits and total income in 2018/19
Your average trading profits and total income across up to the three years between 2016-17, 2017-18, and 2018-19."

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By AJBetts77
29th Mar 2020 13:34

They said you do not get relief for re-investing in the business, which means no add back for AIA
Sorry, was replying to previous comment

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By lionofludesch
29th Mar 2020 13:52

Who are "they"?

And where did they say it ?

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Replying to johnny fartpants:
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By AJBetts77
29th Mar 2020 13:34

They said you do not get relief for re-investing in the business, which means no add back for AIA

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Replying to johnny fartpants:
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By Yorkshireblue
01st Apr 2020 09:53

I asked that question to HMRC through their Twitter support - box 30 was their reply.

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By johnny fartpants
01st Apr 2020 15:19

So taxable income (rather than profits). My lorry driver will be upset but it is really useful to know how this is to be applied.

Thanks for updating me.

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By ComanCo
28th Mar 2020 21:50

I agree with the consensus here.

My guess is that the legislators were silent on the condition because of the sheer impracticality of trying to enforce it. It could also be considered as a blessing to practitioners that the requirement to not work does not need to be conveyed to those eligible.

A minority will experience an increase in income because of the lockdown. If the lockdown lasts less than three months, the government hardly wants to be providing an incentive to delay the recovery by paying people not to work.

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Helen Froggett Thomson
By Helen Froggett-Thomson
01st Apr 2020 14:00

Hi
quite specifically, the self employed can continue trading and the government are encouraging this as a way of keeping the economy going. Your business does not have to be closing down. The payment is in a lump sum and will be for a 'quarter' and not specifically for March, April and May (for example) or April, May and June. Hope that helps?

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By fawltybasil2575
03rd Apr 2020 14:16

@ sammerchant May I reply substantively to your post at 13.10 today.

May I start with the normal caveat – there is a (in your case, IMHO a distant) possibility that the legislation will contradict the current GOV.UK guidance – I would however regard that possibility as less than 10%.

I would refer you again to the GOV.UK guidance to which I provided you a link in my post at 12.02 on 2 April 2020; and specifically to the fourth bullet point requirement that the applicant: -

“Intend(s) to continue to trade in the tax year 2020-21”

This is a wide requirement and the intention to trade at ANY time, to ANY degree in that 12 MONTH period (whether full-time or part-time) (including arguably, albeit not unarguably, in another self-employment) fulfils that requirement.

I would have expected, in 95% of cases, that such requirement would be fulfilled by your clients, albeit I do not of course know their precise circumstances.

Except in the seemingly unlikely event that, for example, the client sells all his self-employment equipment (if any owned) and commences a full-time employment contract elsewhere (with no intention to also carry out any self-employment work) I would certainly regard the requirement would be fulfilled in 95% of circumstances.

Basil.

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Replying to fawltybasil2575:
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By ComanCo
03rd Apr 2020 15:03

When doing a 2020-21 Return, consider the consequences of entering a cessation date within the three month period during which the grant is being claimed. That sort of thing

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Replying to ComanCo:
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By fawltybasil2575
03rd Apr 2020 18:20

@ ComanCo.

In the context of my last post, ie taxpayers intending to continue their self-employment, a 2020/21 Tax Return which showed that there had been a "cessation . . . within the three month period" would have been an INCORRECT Tax Return.

Submitting however a 2020/21 Tax Return CORRECTLY showing that the self-employment continued would produce no adverse "consequences".

Basil.

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Replying to fawltybasil2575:
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By ComanCo
03rd Apr 2020 18:40

We are talking at cross purposes. Of course a Tax return should completed in the light of the facts. The correct cessation date should be input. I am pointing out that a self-employment cessation date should not contradict information in the grant application.

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