Three days to save your SEISS grantby
If taxpayers don’t respond to HMRC’s email by 22 March they will be prevented from making further SEISS claims and may face an enquiry into the grants already received.
HMRC sent this email to a number of established self-employed traders on 26 February 2021, asking them to prove that they are still trading, before they can claim the next two SEISS grants.
Tax agents were not copied in to the email, so accountants may be unaware that their clients have been contacted in this way. The taxpayer may also have missed this important message as HMRC is not in the habit of sending emails directly to taxpayers.
The specific HMRC email about the SEISS grant is not detailed under ‘emails’ in the list of genuine HMRC contacts, so it's unsurprising that taxpayers will have considered it to be yet another scam.
However, it is important that the taxpayer reacts quickly, as if HMRC does not receive a response by Monday 22 March, the trader will be blocked from receiving further SEISS grants. HMRC has also threatened to open a formal compliance check (a tax enquiry) into the taxpayer’s tax affairs where no response is received to this single email.
Conditions for SEISS
To be eligible for any of the SEISS grants the self-employed taxpayer must have traded in all of the tax years: 2018/19 to 2020/21. If the trade commenced after 5 April 2019, and the taxpayer submitted their tax return, including profits from that trade, by midnight on 2 March 2021, they are potentially eligible for the fourth SEISS grant.
However, in all cases the taxpayer must have continued to trade up to the point they applied for the SEISS grant, or that have been temporarily prevented from trading due to the coronavirus restrictions. The taxpayer must be intending to continue to trade as a self-employed individual once the Covid-19 restrictions are lifted.
Tax return trigger
HMRC has checked the self-assessment tax returns for 2018/19 and 2019/20 for indications that a trade has ceased. Where a box has been ticked on the tax return to that effect, and the trader has also claimed an SEISS grant, they will have received the email from HMRC on 26 February 2021.
Reasons for ceasing
The “trade has ceased” box may be been checked on the tax return for several reasons, including:
- a partner left the business, changing the business structure from a partnership to a sole trader – the remaining business owner should continue to qualify for the SEISS.
- one trade has ceased but the taxpayer started a new business in 2018/19 or 2019/20 – the taxpayer should qualify for the SEISS grant even if there was a period of no trading between the two businesses.
- the business was incorporated – the taxpayer will not qualify for SEISS as that scheme is not open to companies.
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