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Hair cutting during pandemic

SEISS 5 challenges taxpayers with turnover test


HMRC has unveiled the scope of the fifth self-employed income support scheme grant. However, the amount will be determined by how much the taxpayer’s turnover has been reduced in the year April 2020 to April 2021.

4th Jun 2021
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Self employed traders will be able to apply for the fifth SEISS grant from late July to cover the months of May to September 2021. However, the news of a turnover reduction test leaves more questions over how the grant will be determined and is a sign that this will be different to the previous rounds. 

Turnover reduction test

The eligibility doesn’t differ from the fourth SEISS grant, with the self-employed individual or partnership having to have traded in 2019/20 and submitted their tax return on or before 2 March 2021, and traded in 2020/21 subject to coronavirus restrictions. For the most part the new guidance doesn’t offer much more than what was outlined in the March Budget.

But where this guidance raises questions is around how the fifth SEISS grant amount will be determined. The guidance released by HMRC states that the fifth grant will be determined by how much the claimant’s turnover has been reduced in the year April 2020 to April 2021. 

HMRC doesn’t reveal at this stage how the turnover reduction test will work in practice. Professional bodies are currently engaged in discussion with HMRC on this point. The guidance does promise more information and support on working out how turnover has been affected by the end of the month. 

Scope of the grant

HMRC has set out the scope of the grant as below:

Turnover reduction     

How much the taxpayer will receive

Maximum grant

30% or more

80% of 3 months’ average trading profits


less than 30%

30% of 3 months’ average trading profits


HMRC will be contacting eligible claimants directly, as it has with the earlier grants, in mid-July. The taxpayer will then be given a date that they can make their claim from. 

Calculation before claiming

ATT technical officer Emma Rawson has flagged to AccountingWEB that the fifth SEISS is a big change from the previous rounds of the grants. 

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Replies (6)

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By Duggimon
04th Jun 2021 13:00

I have a client whose salon trade has been hard hit by the pandemic. They have begun selling products related to the industry in a bid to keep going. The selling activities have meant their turnover has maintained a similar level, but selling items has a much lower margin than the work they were doing, so profits have taken a huge hit.

Previously, the profit based grant requirements meant their income was supplemented by the government, it still will be but with a 63% drop compared with other businesses who could have had a less significant drop in profits.

It seems madness to uncouple the eligibility criteria from the trader's actual earnings and only serves to widen the disparity between those who need and those who get. I understand turnover is easier to measure than profit, but it's also somewhat irrelevant in determining who needs support.

Thanks (3)
By jonharris999
05th Jun 2021 10:19

A key question, which doesn't appear so far to have been addressed, is "reduced turnover compared to what?"

In previous rounds, the answer was "compared to what you think it would have been if there hadn't been a pandemic" - with, as far as we know, no test case yet to inform us of any dispute about that word "think".

Many taxpayers - and, as evidenced by several Any Answers threads on this site, quite a few accountants - have completely misunderstood this in previous rounds, and thought about, discussed or invited comparison with previous years.

Is this round going to be different? If so, which years are to be the basis of the comparison for "reduction"? And how will taxpayers be expected to take account of all the many non-pandemic-related factors, both general to the environment and particular to their own businesses, which will have or would have also impacted on the comparison?

Thanks (1)
By North East Accountant
07th Jun 2021 13:46

If we open up fully on 21/06/21 I fail to understand why SEISS and Furlough shouldn't stop at 30/06/21.

Thanks (0)
Replying to North East Accountant:
By Duggimon
07th Jun 2021 19:52

Are you anticipating everyone forgetting all about the pandemic on 1/7/21 and returning in droves to pubs, nightclubs, concerts, and stadiums? Or do you think perhaps there might be a number of sectors still rather hard hit by it all and seeing a reduction in trade due to the public's reluctance to go back to standing in close quarters with strangers for prolonged periods of time? Do you think this reduction in trade might have a knock on effect to the businesses supplying those sectors as well, and potentially the economy as a whole?

Thanks (0)
Replying to Duggimon:
By North East Accountant
08th Jun 2021 09:03

I don't expect everyone to forget about it over night but it's about time the Government stopped handing out money left, right and centre and people actually took responsibility for their own situation and got back out to work.

Far too many are happy to sit at home on 80% and don't actually want to work.

Lots of sectors are crying out for staff.

Pay people to sit at home doing nothing and they will.

I'll never forget a guy calling into our office asking me for some work back when the financial crisis hit in 2008 and I asked what work are you after. He replied "I'll shovel **it if you pay me".

I asked him to come back 3 days later and watched him walk out the door and go into the office next door. He worked his tail off the few days we had some jobs for him to do.

Now that's a work ethic and the longer the Government pays people to not take responsibility and get off their backsides the longer the financial hangover from all this will be.

Thanks (1)
By kevinringer
18th Jun 2021 13:26

SEISS is claimable by individual partners based on their profit share. I wonder how the turnover test will apply to a partner claimant especially if they have a salary element. I guess we just look at the partnership turnover as a whole. What about a sole trader who took on a partner but the turnover has remained the same? So in effect the sole trader's half share of the partnership turnover is now half what it was when a sole trader.

Thanks (0)