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Profits comparison

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If 2018/2019 chosen to compare turnover 2020/2021 is this the same year to compare profits May/September 2021

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By SXGuy
30th Jul 2021 11:51

You don't compare profits.

You pick a turnover period to compare with the income period for 1st/6th April 20 to 31st March/5th april 21

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rebecca cave
By Rebecca Cave
30th Jul 2021 12:18

No. The two periods of TURNOVER not profits will not necessarily cover the same months in different years.

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By AndyC555
30th Jul 2021 13:38

Although PROFITS (rather than turnover) are key to deciding whether you can claim at all, these being the profits of the period 1 May 2021 to September 2021.

These profits must be substantially lower than they would have been without the effects of the Covid pandemic (or more properly, the effects of restrictions and lockdowns).

I'm not sure this has been properly recognised. Essentially, if your profits in the above period are back to pre-Covid levels, then I suspect you won't qualify for SEISS 5. None of this is likely to come out until 2021-22 tax returns start being submitted when HMRC will, I am sure, be making comparisons between post and pre lockdown accounts and launching enquiries.

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By armstrongbell
30th Jul 2021 14:14

The whole system is so frustrating. Firstly, you can claim now if "you think that your business profit will be impacted by coronavirus (COVID-19) between 1 May 2021 and 30 September 2021. " so quite an element of crystal ball gazing required and how are HMRC going to challenge that if it is based on what you thought 60% of the way through that period but you end up not being impacted?

Secondly the reasons why you can use 2018/19 turnover rather than 2019/20 as your comparison period say:
"If 2019 to 2020 was not a normal year for your business, you can use the turnover reported in your 2018 to 2019 tax return. Your records should show how 2019 to 2020 was not a normal year for you. For example, if you:
- were on carer’s leave, long term sick leave or had a new child
- carried out reservist duties
- lost a large contract
- are eligible for the fifth grant but did not submit a 2019 to 2020 return"
Why isn't an example that sales in Feb & March 2020 fell off a cliff due to Covid so the turnover for that year was already much lower and so not a good starting point for a comparison? Is that scenario in the realm of what they mean by "not a normal year"?

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By jonharris999
31st Jul 2021 08:25

I think you might have misunderstood that there are two entirely separate comparisons required:

One, of activity etc between May and Sept 2021 and its CONSEQUENT effect on profit in any relevant basis period, between what actually happened and what would have happened in the non-Covid parallel universe;

And a second, much more straightforward, between 20/21 t/o and 19/20 (or 18/19) t/o.

If you apply these tests I think your particular confusion disappears (though other questions, as has been said above and elsewhere, arise).

@ArmstrongBell I say that is an equally perfectly acceptable reason to claim use of 18/19. I wouldn't worry about your example not being a cited example.

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