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Coronavirus self-employed scheme questions answered

What does ‘adversely affected’ really mean? What happens if a client makes an incorrect declaration by mistake? Our experts answer your SEISS questions. 

15th May 2020
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This week’s Coronavirus response Q&A webinar coincided with the opening of the self employment income support scheme (SEISS) on Wednesday.

Emma Rawson, technical officer at The ATT, provided an update on the SEISS scheme and Michael Awuye, a senior technical accountant at Crunch Accounting, shared his experiences from the trenches, including the issues he has come across and how he is supporting clients through this process.

Rawson noted that the system hadn’t gone live for everybody. With millions of people expected to be claiming, HMRC is staggering the access over the next few days to ensure the system doesn’t fall down.

After the Chancellor’s extended the furlough scheme until the end of October, the question now is whether he will also continue the self-employment scheme.

“There's going to be a lot of political pressure to extend this scheme,” said Rawson. “If I were to make a prediction, I would expect it will be extended, but with a lower level of support.”

Eligibility checks

Rawson also commented on HMRC's eligibility checks being called into question after several accountants experienced false checks. 

“HMRC isn't looking at things like whether someone changed a legal form or if they ceased to trade. The eligibility check is just looking at the numbers. It's comparing your trading profits to your non-trading income. That's it. So you might get some false positives and even false negatives.

“A lot of people thought they were eligible, and we're being told they aren't. That might just be because the information in HMRC’s systems isn't up to date. If you filed the tax return slightly late this year, they may not be in HMRC systems yet. Same with paper returns.”

Government gateway issues

Accountants are also seeing problems with those clients who are unable to set up a government gateway. “You can't get an agent to claim on your behalf on this scheme. It's down to the taxpayer to make the claim, and if people can't set up their government gateways because they are not digitally capable, then they are going to struggle with that.”

However, she said HMRC is providing a telephone line alternative. “HMRC will effectively just complete the online claim for you if you provide the same information [as online].”

Other accountants are also finding it difficult to instruct their non-tech savvy clients on how to create a gateway account. “I would always recommend if somebody is setting up a government gateway account that they do it through the eligibility checker, because it’s a streamlined process for getting your application through that doesn't involve waiting a week for something to come in the post. If you go through the eligibility checker, you can skip that step,” said Rawson.

For those clients who already have their government gateway account, Rawson recommended making sure the contact details are up to date. “Part of the process checks will probably involve checking what bank account details you put in and what the address is registered to that account with what you've got on your government gateway. So just be aware of that. That could cause some issues.”

£50k threshold complaints

In the webinar, Awuye also shared the issues he has been seeing in Crunch Accounting, with the main one being the client complaints about the £50,000 threshold: “It seems a bit unfair to sole traders. A high-end employee is given a maximum of £2,500. But then if you're a sole trader and earning more than £50,000, then you don't get in it at all.

“A second major issue we've also had clients complaining about is the cut off data swap. HMRC obviously has only got records for 18/19 tax year. But if someone recently became self-employed, let's say in December or January, they don't qualify for the job retention one, neither do they qualify for the SEISS. So that also puts them in the small minority of people who aren't catered for by the scheme.”

Register to watch AccountingWEB's weekly Coronavirus Q&A webinar here

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Self-Employment Income Support Scheme top FAQs

I have clients who have asked me to register for them for SEISS. What do you advise?

Awuye: You can't apply on their behalf. But there are things you can actually do to help them, for instance setting up an online HMRC online gateway account. Walk the client through that as a first step. Once that is done, get into an eligibility checker and walk them through the process.

Rawson: We wouldn't want to see people applying on behalf of clients, as tempting as it may be. And that's because if you are an agent who is a member of a professional body, there's PCRT implications around that. And also, it could trigger HMRC fraud checks, which could end up having the opposite effect and delaying the payment. The online application is fairly straightforward once you've got your government gateway set up. You don't need to do any self assessment or provide any figures. It's really just making declarations about your intention to continue to trade and things like that, so it should be a fairly simple process.

What does "adversely affected" really mean? HMRC give examples, but clients struggle to apply this to their circumstances.

Rawson: Adversely affected is very loosely defined by HMRC. There's no income threshold, you just have to show that they have been adversely affected in some way. HMRC do give some examples such as staff not being able to come in or having to close down the premises or losing your customers. So people will be adversely affected to different levels. I would recommend people document the reasons why they've been adversely affected, just in case HMRC do come back and ask questions later on.

For many self-employed clients, the averaging process, including the government's capital allowance incentive scheme will produce very little, if anything. Do you think this will lead to non-compliance? 

Rawson: I think that what we're getting at here is that to work out your trading profits for applying the tests of the £50,000, they'll take into account capital allowances claims.

So if you have made a large capital purchase and you've got AIA on that, for example, that could have wiped out your profits, and really reduce what you're entitled to. If people are in genuine hardship as a result of not being able to get this, there are other avenues they could explore, like Universal Credit, or you could even try to contact HMRC to try and explain, but as it stands at the moment, I don't think there's going to be any changes around that capital allowances rule.

Is there a date when the applications for the self-employed income support scheme will close?

Rawson: We don't have the details on that at the moment. I would encourage people to claim as soon as possible, just in case.

Awuye: It's also important that clients have the correct contact details on HMRC's accounts because it seems like they will be contacting you by text to notify you of when you can go in and make a claim.

If a client makes an incorrect declaration by mistake (eg a sole trader now incorporated still thinks they are self employed) and gets SEISS funds as a result, will they have to repay if the mistake is identified?

Rawson: We're still waiting for exact details of how HMRC's compliance approach is going to be worked through. We're expecting that to go into the finance bill. I would expect that in that scenario, if HMRC came across it during compliance activity that they would expect a repayment of some kind, but hopefully the penalties will only be applied where there has been intentional, fraudulent behaviour.

Awuye: It would also be vital for that client to contact HMRC as soon as possible, to make them aware because obviously HMRC has always got this policy that if you come clean before they pick up on it, they will be a bit more lenient with you.

A client has just emailed saying 'everyone eligible for the scheme has already been contacted by HMRC with a unique claim code'. Is this true?

Rawson: No, we are seeing a lot of scam attempts and general rules apply. If somebody's been sent a link to click on in an email, don't click on it. And if they're contacted by phone out of the blue and asked for personal details don't give them but there's no claim reference ID that I'm aware of being given out.

Awuye: HMRC would always just send you a code for you to log into the HMRC account. It never sends out links as far as I'm aware.

For one of my clients, the eligibility checker says "The information you have does not match our records" even though the information entered is correct. He has received a letter saying he may be eligible. What's the best way forward?

Rawson: If the checker does not recognise the client at all, ring the helpline. If you've gone through the eligibility checker and it says you're not eligible, but you think you are, there is a link to ask HMRC for a review.

Hosted by AccountingWEB experts, Coronavirus Response Q&A brings together accountants to talk about the impact of the coronavirus, share what they’ve learned and the practical steps they’re taking to safeguard their practices and support their clients. Register to watch next week's event.

Replies (16)

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By sammerchant
16th May 2020 15:57

Some points I am being asked about
- does the portal disappear after 18 May and does anyone who miss this date lose out on a claim altogether?
- would the £7,500 (or whatever is received) be allocated over the 2020/2021 year? Or over just 3 months? And if it is 3 months, do these start on 01 March or on 01 April? I am thinking particularly of self-employed with year-ends that do not coincide with the tax year.
- As the basis for the 2020/2021 tax year for someone with a 30 April year-end would be 30 April 2020, can they cease to trade before the end of their 2021/2022 tax year?

Any input would be helpful, even if you have the same queries as I have.

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Replying to sammerchant:
Tornado
By Tornado
20th May 2020 13:33

I am working on some self employed accounts for the year to 5th April 2020 but they are on hold at the moment as I am still unable to determine if the Grant can or needs to be apportioned over two tax years.

Has anyone discovered the answer to this yet?

UPDATE

I think this may help (Question of 14th May)

https://www.tax.org.uk/policy-and-technical/covid-19/self-employment-inc...(in%20which%20tax%20year)?

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By Rafi
16th May 2020 18:13

The self-employment scheme of 80% is for 3 months.
Which 3 months? March to May, or April to June?
Secondly, is it going to be reoccurring? Or one-off?

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Replying to Rafi:
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By Graham Greenwood
18th May 2020 10:12

March to May. One-off at the moment

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By monksview
18th May 2020 10:01

Good luck with the helpline. I called this morning, on hold for 40 minutes then it got picked up by the general office line. Who had no choice but to transfer me back into the SEISS helpline queue

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By Graham Greenwood
18th May 2020 10:10

Re your question on the closure of the scheme, and also to scannerchant, HMRC have said this morning that they have no plans to close the scheme for claims. So if you have a client who is not confident with computers, they could wait until you are allowed to visit their premises to assist them

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By Graham Greenwood
18th May 2020 10:10

Sorry, scammerchant

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Replying to Graham Greenwood:
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By sammerchant
19th May 2020 11:56

My clients don't think I scam them !!

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Replying to sammerchant:
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By Graham Greenwood
01st Jun 2020 14:29

Once again, Sam, I am so sorry

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Replying to Graham Greenwood:
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By sammerchant
02nd Jun 2020 15:06

That's all right! I hadn't come across that before; I must tell my family as they'll get a big kick out of it!

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By pauljohnston
18th May 2020 10:39

I have just done an application, not for a client but for our odd job man. He is severely dislexic has no mobile phone or email address or computer. He is not a client.

The paperwork says you can get a friend to help.

We found that apart from UTR, NINO and date of birth that he also needed his passport so that HMRC could verify him. Since he is dislexic I would be suprised if he had and credit cards or bank loans.

The application went through ok but it made me wonder how many in a simalar position are being heavily disadvantaged. Because of COVID-19 the library's and the CAB are closed so where would such a person go. To his or her tax agent who cant help!

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By mikegabb
18th May 2020 11:31

My clients seem to have got a lot more 'tech-savvy' recently. Can't think why!

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By North East Accountant
18th May 2020 13:33

At the declaration stage it says - "by submitting this claim, you are confirming"
. your business has been adversely affected by coronavirus.
. your claim is in accordance with HMRC's published guidance.
.the information you have provided is correct, to the best of your knowledge.
.if any of this information changes, you will contact HMRC to amend the claim.

No guidance exists on what is classed as adversely affected.

Looks like HMRC expecting people to submit amended claims and repay the grant is things improve.

I wonder how many of the self-employed, who all had to submit their own claims, noted this and will actually act on it.

Virtually none is my guess.

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Replying to North East Accountant:
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By Graham Greenwood
18th May 2020 14:55
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By rockallj
18th May 2020 15:13

I have had 2 clients who started SE in the middle of 17/18 so should have their profits averaged over 15 months. HMRC has calculated their grants based on profits averaged over 36 months.

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By seitler
04th Jun 2020 15:18

One of our clients have claimed successfully. However their average profits over the last 3 years were around £60K !! Do they need to tell hmrc ?

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