Coronavirus Self-employed Income Support Scheme (SEISS) November 2020 Claims

The third tranche of claims under the SEISS opened yesterday for all qualifying self-employed people in the UK. You must make your claim before 29 January 2021. The qualification criteria remain the same as in previous period claims. However, there is a significant difference between the declarations required to make a claim for this third tranche, which covers the period from 1 November 2020 to 29 January 2021.

All of the non-qualifying individuals from the start of the scheme in March 2020 remain unqualifying, so those

  1. Who started in business after 5 April 2019, or
  2. whose self-employed income is less than 50% of total income, or
  3. whose annual average profits for 2016/17 to 2018/19 exceed £50,000, or
  4. who submitted their 2018/19 self-assessment return after 23 April 2020 will not get any assistance.

The amount to be claimed is 80% of average profits for the three years 2016/17 to 2018/19, limited to a maximum of £2,500 per month, the same as in the first tranche of this grant, and it will be paid out in one single amount covering all three months, November to January.

Change in emphasis to enable the claim

With the first two tranches of this SEISS grant, the taxpayer in making a claim had to state that their trade ‘had been adversely impacted by the Covid pandemic’. This was a difficult concept to properly determine and therefore allowed wide scope for interpretation and potentially a wider pool of claimants.

Now, for this third tranche, the taxpayer has to certify compliance with a much narrower and specific set of tests that relate to the demand for their products and services and its financial impact.

You must be able to state that

  1. Either you have traded in 2019/20 but be temporarily unable to trade due to Covid, or
  2. Are currently trading and that the trade is ‘impacted by Covid that has caused reduced activity, capacity or demand’ compared to what was expected, and
  3. You reasonably believe this reduced activity will result in a ‘significant reduction in trading profits for the relevant basis period’
  4. In either case you intend to continue to trade

You must keep records that show how your business has been impacted and how that results in reduced demand.

There are a number of critical factors in these requirements that need to be considered in more depth.

Reasonable belief

This is a positive test and not simply your view that Covid is bound to impact you negatively. If you have no evidence that your profits will be significantly reduced, you need to wait until you have this to enable your reasonable belief to be justified.

Significant reduction

There is no definition of what constitutes ‘significant’ so it should take its normal English meaning… important, striking or noticeable. The reduction in demand must therefore lead to an important or noticeable reduction in profits.

Relevant basis period

The basis period is the accounting period that forms the basis of your tax assessment, and which contains the claim period of 1 November 2020 to 29 January 2021. If you make up your accounts to 31 March, that will be the year to 31 March 2021, but if your accounting date is say 31 December, there will be two relevant basis periods, one to 31 December 2020 and another to 31 December 2021. It is the profits for the whole of the basis periods that have to be ‘significantly reduced’, and not just profits in the claims period. This is a much broader assessment and one that HMRC will be able to test when they see your tax returns, so you would be advised to check your claim afterwards when these profits become clear, to see if you perhaps need to repay the grant before HMRC conduct any checks on its validity.

Other business

There is no guidance on you having changed your business to a new one since March 2020 and whether the profits of the new business are to substitute for profits of the old business when carrying out your judgement of reduced activity or significant profit reduction

Examples

HMRC has issued a number of examples showing eligibility to claim that can be accessed via this link. A claim cannot be made in relation to reduced activity that stems from self-isolation as a result of travelling to the UK, but can be made if you have to self-isolate because you have Covid.

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