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The 3rd SEISS Grant – “Don’t Ask Me About My Business, Rishi”

Tax Tips

The 3rd SEISS Grant – “Don’t Ask Me About My Business, Rishi”

 

A bit like the 3rd Godfather film, the 3rd SEISS grant claim needs to be approached with the attitude that if you don’t pay attention to the detail, you might find that it doesn’t quite live up to its predecessors and that in the end there’s a good chance you won’t get it.

The portal for the 3rd SEISS grant opens for claims on Monday 30th November.

Guidance has been published which taxpayers need to consider carefully before claiming as there are significant changes from the 1st and 2nd grant.

In making these changes, HMRC has quite drastically altered the conditions needed when claiming the first and second grants.

It gives clear indication that HMRC will be looking at 2020/21 tax returns and comparing them to previous tax years to ensure that the 3rd grant has been legitimately claimed.

The 3rd Grant

In order to qualify, businesses need to not only be adversely affected due to COVID but also:

  • Be currently trading but be impacted by reduced demand due to COVID or;
  • Have been trading but temporarily unable to do so due to COVID

An additional test has been added in which the taxpayer must:

  • Intend to continue to trade and;
  • Reasonably believe that there will be a significant reduction in their trading profits due to reduced activity, capacity or demand or inability to trade due to COVID during the period 1 November to 29 January 2021.

Some examples of the terminology are included in the footnotes below.

HMRC are therefore expecting applicants to make “an honest assessment” about whether they reasonably believe their business will have a significant reduction in profits.

The Calculation & Claim

The 3rd grant is calculated in the same way as the 1st and 2nd grants (i.e. based on the same tax years and the £50k income cap and 50% of income tests all apply, as before) so all taxpayers previously excluded will continue to be excluded.

The grant payable is the lower of:

  • £7,500.
  • 80% of average monthly trading profits, covering a three month period, calculated as for the first grant.

The claim deadline is 29 January 2021, so if you are currently unsure if the next few months will see a downturn, but then by January realise that this is the case, you still have time to access the support.

The 3rd grant, as with the 1st and 2nd, is subject to tax and national insurance.

The grant can only be claimed by the taxpayer and not by their accountant/advisor.

The 4th Grant

The 4th grant will cover the period February to April 2021.

The Government will review the level of the 4th grant and provide details in due course.

Definitions – Currently trading: reduced demand

This might include where you:

  • Have fewer customers or clients than you would normally expect, resulting in reduced activity due to social distancing or government restrictions.
  • Have one or more contracts that have been cancelled and not replaced.
  • Carried out less work due to supply chain disruptions.

You must not claim if the only impact on your business is increased costs. For example, if you have had to purchase face masks and cleaning supplies. This would not be considered as reduced demand.

HMRC have given a number of examples of reduced demand: How your trading conditions affect your eligibility for the SEISS.

If you are currently trading but have reduced demand due to Coronavirus you must keep evidence to support this fact at the time of your claim. Examples may include:

  • Business accounts showing a reduction in activity compared to previous years.
  • Records of reduced or cancelled contracts or appointments.
  • Fewer invoices.
  • A record of dates where you had reduced demand or capacity due to government restrictions.

Definitions – Unable to trade

If your business is temporarily unable to trade due to Coronavirus, you must keep evidence, such as:

  • A record of dates where you had to close due to government restrictions.
  • NHS Test and Trace communications: if you’ve been instructed to self-isolate in-line with NHS guidelines and are unable to work from home (if you have been abroad and have to self-isolate, this does not count).
  • A letter or email from the NHS asking you to shield.
  • Test results if you have been diagnosed with Coronavirus.
  • Letters or emails from your child’s school if you have had parental caring responsibilities.

If you had to close before 1 November 2020 and continued to be closed for a period of time up to 29 January 2021, you can still claim as long as you are eligible.

HMRC have given a number of examples of being unable to trade: How your trading conditions affect your eligibility for the SEISS.

If you have any questions please get in touch or book a meeting with us.