SEISS third grant applications open tomorrow – how will HMRC assess eligibility? Check now

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SEISS payments have recently been boosted by Rishi Sunak. Given the continued economic impact of coronavirus, the Chancellor was forced to change the scheme so the third set of grants will cover 80 percent of income, up to £7,500 in total.

These grants will be taxable and they must be claimed by January 29 2021,

the online service for the third set of grants will be available from tomorrow, November 30.

In order to be eligible for a third grant, a claimant must be a self-employed individual or a member of a partnership.

They will not be able to make a claim if they trade through a limited company or a trust.

On top of this, the government have recently changes eligibility rules which some have argued makes it harder or more complicated for applicants.

Claimants must have traded through all of the tax years from 2018 to 2020 and must either:

  • be currently trading but are impacted by reduced demand due to coronavirus
  • have been trading but are temporarily unable to do so due to coronavirus

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Declarations must be made that the claimant intends to continue to trade and reasonably expects there will be a significant reduction in profits going forward and it is these two elements which have seen alterations this week.

Reasonable belief

The changes for this element require claimants to provide specific evidence, as the government detailed: “In order to claim, you must reasonably believe that you will suffer a significant reduction in trading profits due to reduced business activity, capacity or demand or inability to trade due to coronavirus during the period November 1 to January 29, 2021.

“You must keep evidence that shows how your business has been impacted by coronavirus resulting in less business activity than otherwise expected.”

Significant reduction

Changes to this element require claimants to work with a certain level of vagueness and anticipation, as the government confirmed: “Before you make a claim, you must decide if the impact on your business will cause a significant reduction in your trading profits for the tax year you report them in.

“HMRC cannot make this decision for you because your individual and wider business circumstances will need to be considered when deciding whether the reduction is significant.

“You should wait until you have a reasonable belief that your trading profits are going to be significantly reduced, before you make your claim.”

Fortunately, there are examples of applicable scenarios on the government’s website which can help claimants work out if they’ll receive payments.

Once a claim is submitted, HMRC will work out and process the applicant’s eligibility.

They will first look at the claimant’s 2018 to 2019 self-assessment tax return.

From there, they will then evaluate trading profits and eligible claimants must not have more than £50,000.

Should claimants not be eligible based on their 2018 to 2019 returns, HMRC will look into the claimant’s tax year results from 2016 through to 2018.

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