Member Since: 20th Mar 2021
Liz is a qualified chartered accountant with over 30 years' experience of helping small businesses and individuals with tax and accounts. She publishes an extensive range of client-friendly tax guides on her site cleartaxinfo.online.
29th Apr 2021
It does seem likely that the scenario you have suggested could easily be flagged up by HMRC's machinery for a challenge. However, if the large contract arising in the latter part of the year wasn't anticipated when the SEISS 4 claim was made, that would form part of the response to the challenge. To be prepared for the scenario to play out it would be useful to keep a time-line (could include a diary, email archive, notes and projections) of when circumstances changed and new contracts came along.
29th Apr 2021
Turnover does need to have been reduced though. If a trader has charged higher prices for reduced activity so that there is no impact on turnover, they have worked smarter but wouldn't be entitled to SEISS. HMRC's examples show just how constrained the availability of SEISS 3 and 4 was intended to be https://www.gov.uk/guidance/how-your-trading-conditions-affect-your-elig... .
29th Apr 2021
The professional bodies have been pressing HMRC to provide data on SEISS to agents for a year now. It seems that in the fullness of time, rather than when needed, it's possible that there may be an API to pre-populate tax software with SEISS grants - personally I'm not holding my breath.
HMRC are suggesting that it has some connection with the PAYE reconciliation process!
HMRC have said that they couldn't include SEISS grant information in the 'information to help complete your tax return' under on the agent accessible information on HMRC's website because the security level is inadequate. Feels like a poor excuse to me since state pension information (sometimes) being provided and despite all the things agents can do having logged in to HMRC's site.
Although not much help to accountants, apparently individual taxpayers using HMRC software have displayed to them the amount of SEISS they received. HMRC does not pre-populate the 2021 Tax Return but if the taxpayer's declared SEISS does not agree with the initial page, a warning is displayed.
And turning to the other points raised, this must be why the Treasury is hopeful of recouping so many grants 'wrongly' claimed, or at least grants which the recipients can't prove were appropriately claimed. Perhaps HMRC will achieve a higher strike rate against unrepresented taxpayers though if accountants are able and willing to help clients justify SEISS claimed, even if this has to be part of the continuing support so many have provided free of charge to clients during the pandemic.
21st Apr 2021
HMRC's guidance says: '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.'
Depending on other income, the trader's tax will be higher than usual with only a small reduction in profits and SEISS on top of that. Whether it's morally right to keep the full amount is for the trader to decide.
21st Apr 2021
This is something which will be addressed in more detail in next week's article, but there are two elements with different reference periods:
1. 'the business of which has suffered reduced activity, capacity or demand in the qualifying
period' - reduction in TURNOVER in the qualifying period (1/2/21 to 30/4/2021)
2. 'a significant reduction in trading profits for a relevant basis period from that which would otherwise have reasonably been expected as a result of that reduced activity, capacity or demand' - significantly reduced PROFITS in at least one of the basis periods that the three months Feb/Mar/Apr 2021 fall into. So for traders with 30th April year ends the significantly reduced profits will need to be in y/e 30/4/21 for SEISS 4; for any other year end date, there are two potential basis periods only one of which needs to have significantly reduced profits for SEISS 4. The significant reduction in profits must be looked at for the basis period as a whole, usually 12 months, not just the 3 months of the qualifying period.
P.S. A client friendly document on Proving Entitlement to SEISS 1-3 is available from my website www.cleartaxinfo.online