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SEISS rules were altered shortly before applications for third grants opened up and new guidance was issued by the government on November 30. In analysing the new rules, Old Mill the expert accountant and financial advisors, warned the new criteria is tighter and claimants may need to even forecast their oncoming financial results.
Originally, announcements indicated that to qualify for a third grant, affected business needed to not only be adversely affected by coronavirus 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.
However, Chris Bowles, a director at Old Mill, warned the new rules are significantly different to what was expected and understanding them before applying is crucial.
Chris explained: “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.”
Additionally, HMRC details they expect claimants to make an “honest assessment” about whether they reasonably believe their business will have a significant reduction in profits as a result of the pandemic.
This Chris highlighted could lead to difficulties: “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.
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“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.”
Currently, claimants have until January 29 2021 to make a claim for a third grant.
These claims can be made even where an applicant has not received a first or second grant.
To process claims, people will need the following information at hand:
- Their Self-Assessment Unique Taxpayer Reference (UTR)
- Their National Insurance number
- Their Government Gateway user ID and password
- Their UK bank details including account number, sort code, name on the account and address linked to the account
Claims must be made by affected individuals themselves and must not be delegated to tax agents or advisors.
If this is done, it could trigger a fraud alert which will delay payments.
For those who are struggling to apply online, they should contact HMRC for assistance.
Once a claim is put through, a person will be able to return to it and update it if need be.
When the application process is completed, grants should be paid within six working days.
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