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