Are you confident of your SEISS eligibility?
22nd November 2021
Grants awarded under the Self-Employment Income Support Scheme (SEISS) were a vital lifeline for many businesses during the economic hardship of the pandemic. There is recognition from the government that some of these grants may have been deliberately or inadvertently fraudulently claimed however, with specific budget now allocated to an audit of applications. Any business in doubt as to the eligibility of their claim should take the time to check that they met required criteria as fines may be issued to those who did not.
Eligibility conditions varied for the five SEISS grants available. A summary is given below but a detailed breakdown is also available from HMRC or by speaking with your accountant.
First, Second and Third Grants Eligibility Criteria:
- A self-assessment tax return for the tax year 2018/2019 must have been submitted on or before 23rd April 2020 and the business must have been trading during this tax year. The trading profits for this year must have been less than £50,000 and at least equal to non-trading income. HMRC looked at the 2016/2017, 2017/2018 and 2018/2019 tax years if a business was not eligible on the 2018/2019 tax return.
- Must have been trading in the 2019/2020 tax year and intended to trade in 2020/2021
- Trade must have been negatively impacted by coronavirus (this could have been because of impact on trading/customers/supply chain/employees or because personal circumstances such as health or caring responsibilities prevented working.)
- Not eligible to claim the grant if a limited Company or operating a trade through a trust
- If on parental leave, then claimant should have still checked eligibility as may have still classed as trading and been able to make a claim. Maternity allowance did not impact access to this grant.
- If paid for work under the Loan Charge or similar form of credit under this scheme, then may still have been eligible for the grant using previous tax year return, even if loans were removed following the recent government review into this area. Under these circumstances, would not have been subject to the same 23rd April deadline for tax return submission for 2018/2019.
- If claiming averaging relief then HMRC used profit before the impact of the average claims to work out eligibility and total claim amount
- If self-employed but a non-resident of the UK or resident and chose the remittance basis, then may still have been able to claim the grant. Must have confirmed trading status over the 2016/2017, 2017/2018 and 2018/2019 tax years and that annual profits were not more than £50,000. If not trading in all of these years then HMRC may still have made calculation based on other tax years.
- If in a partnership, each partner would have needed to make a claim and HMRC allocated grant based on share of the partnership’s profits.
Fourth and Fifth Grants Eligibility Criteria
Unlike previous grants, the latest round took into account tax returns filed in 2019/20, allowing newly self-employed people to claim.
The eligibility criteria for the fifth grant was slightly different as it was means tested. You could claim:
- 80% of three months’ average trading profits, capped at £7,500, if you could demonstrate a reduction in turnover of 30% or more
- 30% of three months’ average trading profits, capped at £2,850, if you had a turnover reduction of less than 30%
- The rest of the eligibility criteria remained unchanged from previous iterations of the scheme.
Have you completed your 2019/20 Self Assessment Tax Return?
HMRC is also now writing to anyone who received one of the first three SEISS grants but has yet to complete their return for 2019/20, which should have been submitted by 31st January 2021. Additionally, if you did complete a return but did not report any self-employment or partnership income, then you should also receive one of these letters.
The letter stipulates that recipients must provide all requested information within 30 days or repay the grants.
If you ceased trading in 2019/20 and claimed SEISS then you were not eligible for the grant and will also be required to repay it in full.
In all instances where the grant has been incorrectly claimed, a penalty fine may be applied if more than 90 days has passed since it was received.
Seek Professional Support if Required
HMRC is advising the guidance of a professional accountant or tax specialist for anyone struggling with their SEISS eligibility. There is also a list of FAQs directly on the government website.
If you have any questions around this topic or require assistance with auditing your Self Assessment or SEISS claims, our specialist tax department is able to help.
Please speak to one of our expert team by clicking here.
