30th November 2020
HMRC have updated their eligibility criteria for applicants wishing to make a SEISS application for the third grant.
By way of a reminder, the third SEISS grant will be open to applicants from 30 November 2020 and the claim must be made on or before 29 January 2021.
This grant will be calculated in the same way as the prior two grants, this means the calculation will be based on the same tax years as the prior two grants and the £50,000 income cap and the 50% of income deriving from self-employed activity tests remain in place still. The taxable grant will still be worth up to 80% of normal taxable profits
The new eligibility tests will be significantly different compared to the claims made for the previous two SEISS grants. HMRC have really appeared to have tightened their eligibility criteria.
The guidance published by HMRC states that an additional eligibility test would be included, which is that the taxpayer must ‘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’
HMRC state that it remains the responsibility of the claimant to make an honest assessment to determine if the above applies. To help with this HMRC have published a range of examples to help explain what suffering from reduced demand or being unable to trade actually looks like.
It is our understanding that the significant reduction in trading profit test is to be applied to the entire accounting period. This may make things difficult as potential claimants may need to forecast the results to help see if they will be eligible. There is likely to be scrutiny of claims by HMRC in due course with claims possibly requiring to be repaid with penalties applied.
HMRC have now also specifically stated that an increase in costs (e.g. due to purchasing masks and other PPE equipment) does not make a business eligible under this new criteria. Furthermore, a reduction which has only been caused by having to self-isolate or provide care for a person required to self-isolate will also mean that a claim is not eligible.
If you do require any assistance with the above when making your claim then please feel free to contact us.
