Check your October emails. HMRC have emailed approximately 24,000 self-employed traders who have claimed a self-employed income support (SEISS) grant asking whether they were still trading – if you have received an email you must respond to HMRC by 20 November 2020 or you won’t be able to make a further claim for another SEISS grant
Who has HMRC Contacted by Email?
Less than 1% of the 2,657,000 traders who had claimed either or both of the first or second SEISS grants by 30 September were contacted. HMRC only sent emails to people who it believed have ceased trading, based on information it holds. This data could be a cessation date for the business reported on the 2019/20 tax return, an application to deregister for VAT, or information from another source.
Cancelling a VAT registration does not mean the business has ceased trading. Many businesses will have experienced a reduction in trade during the pandemic that could take their expected sales for the next 12 months below the deregistration threshold of £83,000.
I found an email from HMRC in my junk folder – How do I to reply?
The email asks you to respond to HMRC by completing an online form to confirm you have stopped trading and permanently closed the business. If the business ceased on or before the day they applied for the SEISS grant they will have to repay that funding.
As Tax agents we were not able to apply for SEISS grants on behalf of their clients, so we (and or your tax adviser) will not have seen the emails HMRC sent directly to the taxpayer. Do check your junk and spam boxes for emails from HMRC as soon as possible.
If you do not respond to HMRC’s email by close of business on Friday 20 November you will be prevented from applying for further SEISS grants.
Who is excluded?
The portal to apply for the third SEISS grant will open on 30 November and the funds should be paid out within six working days. But as for the previous SEISS grants the third grant will be calculated as 80% of the your average annual profits and paid for a three month period, capped at £7,500.
However, the average profits are still based on historical profits reported for the years 2016/17 to 2018/19. Any self-employed individuals who started trading on or after 6 April 2019 are excluded from the SEISS.
HMRC’s own statistics show that of 5m people who reported self-employed income in 2018/19, only 3.4m were potentially eligible for the SEISS grant, as at least half of the taxpayer’s income had to come from self-employed profits. Also those with average annual profits exceeding £50,000 were not eligible, even if their income dropped significantly due to coronavirus.
The Institute for Fiscal Studies estimated that of traders who have at least half of their annual income made up of self-employed profits, 18% were ineligible for SEISS grants. Also, of all taxpayers with some self-employed income in 2018/19, some 38% did not qualify for SEISS.
Some of the potentially eligible traders won’t have been adversely affected by the coronavirus pandemic (a fact HMRC would not know from past returns), or will have ceased trading since April 2019.
Self-employed traders must respond to HMRC’s email about their business by 20 November 2020 or they won’t be able to make a further claim for another SEISS grant.
HB Accountants would like to thank Accounting Web for the information contained in this blog
We hope this information helps you and we are here for you during this difficult time. We will continue to keep you updated as the Government releases new information. Our business contingency plan is in place and we will do everything we can to support our clients during this uncertain period, please do not hesitate to contact us here if you have any concerns or queries.
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The information contained above is for general guidance purposes only. Whilst every effort has been made to ensure the contents are accurate, please note that each individual has different circumstances and it is essential that you seek appropriate professional advice before you act on any of the information contained herein. HB Accountants can accept no liability for any errors or omission or for any person acting on or refraining from acting on the information provided in the above