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Changes to SEISS grant criteria is becoming a potential ‘MINEFIELD’ says finance advisory firm
Changes to the latest Self-Employed Income Support Scheme (SEISS) grant criteria is becoming a potential ‘minefield’ according to one finance advisory firm.
Financial advisers Old Mill say it’s important for business owners to understand that the eligibility criteria has been further tightened. They have urged self-employed claimants to consider the new rules carefully before claiming their third SEISS government grant.
Previous policy announcements indicated that to qualify for the third grant, a business needs to not only be adversely affected due to COVID-19 but also to:
be currently trading but be impacted by reduced demand due to coronavirus; or
have been trading but be temporarily unable to do so due to coronavirus.
The latest guidance includes an additional test which is that the taxpayer must:
intend to continue to trade; and
reasonably believe there will be a significant reduction in their trading profits due to reduced activity, capacity or demand or inability to trade due to coronavirus.
Chris Bowles, a director at Old Mill’s Wells office, stressed that the new rules are significantly different, and it is important to understand them fully before claiming.
He said: “We understand that the significant reduction in trading profits test is to be applied to the accounting period as a whole, which means that claimants will potentially need to forecast their financial results in order to establish their eligibility for this third grant.”
HMRC’s guidance also indicates that it expects claimants to make ‘an honest assessment’ about whether they reasonably believe that their business will have a significant reduction in profits
Chris adds: “Whilst it can be difficult for hard-pressed owner-managers to keep abreast of the constant changes coming out of the Treasury, this tightening of the criteria is really important.
“Essentially, HMRC have introduced a test where a taxpayer needs to be comfortable that their profits in the year they’re claiming for will be significantly reduced from prior years. Hence it’s ever more important for business owners to have systems in place which give them accurate and timely accounting information to enable them to make the necessary assessment.”
“This is becoming potentially a bit of a minefield and we strongly urge that claimants have a conversation with their adviser if they are in any doubt about the new rules as we can foresee that some taxpayers may inadvertently miss the fact that the new criteria is significantly different from those that applied to the earlier grants.”
Workers have been able to apply for the third SIESS grant since Monday 30 November, and have until 29 January 2021 to make the claim.
To make a claim for the latest grant the claimant’s business must have been impacted by coronavirus on or after 1 November 2020.
Support for millions of workers through the third SEISS grant will cover November to January and will be calculated at 80% of average trading profits, up to a maximum of £7,500.
