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SEISS 5: Tricky turnover test revealed

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To apply for the fifth SEISS grant, taxpayers will need to have two different turnover figures prepared in order to claim. But working out those figures won’t be easy for many traders. 

7th Jul 2021
Tax Writer Taxwriter Ltd
Columnist
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The portal to apply for the final self-employed income support scheme grant (SEISS-5) is due to open later this month, but this time traders need to do their homework first or they will fall at the first hurdle.

As was the case for the first four SEISS grants, accountants won’t be permitted to apply on behalf of clients, so a good deal of hand-holding will be required for some traders.

Qualifying conditions

When applying for the first two SEISS grants the trader had to make a declaration that their business had been ‘adversely affected’ by the Covid restrictions, which is a term open to much interpretation.

To qualify for the third and fourth SEISS grants the trader also had to declare that their sales had reduced in the qualifying period due to the pandemic, compared to what would reasonably be expected for that period. However, the taxpayer was not asked to supply any figures to back up this assertion that sales were actually less than expected.

We were warned back in June that HMRC was tightening up the turnover test for the fifth SEISS grant and that taxpayers would have to prove their sales had reduced in order to qualify. HMRC has now released guidance on how to work out turnover for this test, but it is not logical and it may well confuse tax advisers and taxpayers alike.   

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Replies (52)

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By Syd
02nd Aug 2021 21:44

Does this mean that if someone is newly self employed in 19/20 (say traded for 3 months) and then had a full (but Covid affected) year in 20/21, they will be unlikely to qualify unless that years trading was less than the 3 months in the year before ? Feels pretty unfair to me ….. unless I’ve misunderstood?

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Replying to Syd:
Morph
By kevinringer
03rd Aug 2021 08:10

https://www.gov.uk/guidance/work-out-your-turnover-so-you-can-claim-the-...

"If you started or ceased a business in your reference year
You should include the turnover received in your reference year, even if this covers less than 12 months."

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