How to challenge SEISS grantsby
Applications for the last SEISS grants closed on 30 September 2021, but you can still challenge the amount of grant paid, even where HMRC decided the taxpayer was due nothing.
The self-employed income support scheme (SEISS) was designed to help small unincorporated businesses survive the Covid pandemic, when they were unable to trade, or were subject to restrictions that affected the trade.
The first SEISS grants were made available in May 2020, but tax agents were locked out of the application process. HMRC said this was because it had to move quickly to launch the new system, and adding in functionality for agents to apply on behalf of clients would have slowed down the roll-out too much.
At first the eligibility criteria for an SEISS grant was relatively simple; in essence the trade had to make up the more than half of the taxpayer’s income, and profits must have diminished due to the pandemic. The trader also had to declare that they intended to continue to trade.
Applications for the third SEISS grant opened in November 2020, and the trader was now required to declare that their trade was impacted by reduced demand or was temporarily closed, rather than the more woolly “adversely affected” condition. The trader also had to be eligible for the first two grants in order to qualify for the third, even if they didn’t claim the first two.
SEISS 4 and 5
The fourth and fifth SEISS grant applications were open to relative new traders who started their businesses in 2019/20. These individuals risked missing out on the grants if they did not reply to the SEISS verification letter from HMRC within a few days.
The taxpayer also had to show that their turnover (not profits!) for the tax year 2020/21 had reduced compared to a reference period, by up to 30%, or by 30% or more. The reference period was the turnover for the accounting period reported on the 2019/20 tax return.
Tax agents were still cut out of the application process so taxpayers had to source and input these turnover figures on their own, perhaps with their agent helping behind the scenes.
The HMRC guidance for SEISS 4 was initially misleading as it said the 2020/21 figure of turnover would be found on the 2020/21 tax return, but that would not be the case if the business has an accounting period which does not align with the tax year. Also, an accurate figure of sales in 2020/21 may not have been available by the deadline for submitting applications: 30 September 2021
Once the quantum of drop in turnover had been established (up to 30% or more than 30%), the amount of SEISS grant was based on the average trading profits (not turnover!) for the four years: 2016/17 to 2019/20.
There was scope for a lot of confusion and error when compiling the figures for turnover and the amount of the grant – which HMRC has always calculated.
What you can do to help
You can check the eligibility of your clients for all the SEISS grants, as it is not too late to claim if they were the victim of an HMRC error (perhaps their tax return had not been processed), or exceptional circumstances existed. You or the client need to contract HMRC by 28 February 2022 to make a late SEISS claim.
If an SEISS grant was received but you believe it was too low you can also appeal by contacting HMRC on 0800 024 1222 by 28 February (line open 8am to 4pm).
What to supply
You, as the tax agent, can make the SEISS appeal but you need to provide all of the following information:
- the grant claim reference
- client’s NI and UTR numbers
- client’s Government Gateway user ID used to make the claim
- why you think the grant amount is too low
Remember the SEISS grants are taxable, so they need to be declared on the self-assessment tax returns for the years in which the grants were received.