In advance of the claims portal opening, HMRC has contacted those potentially eligible for the fourth Self-employment Income Support Scheme (SEISS) grant. ICAEW’s Tax Faculty has updated its guidance and a webinar is available to all members.
Somewhat later than hoped, claims for the fourth SEISS grant will open over the next week. HMRC has written to each potential claimant giving them their personal claim date. The faculty understands that these dates fall between 22 and 29 April; the phasing is to allow HMRC to manage demand.
The date provided is the earliest date on which the taxpayer can apply; the portal will remain open until 1 June 2021. Those who believe they are eligible but do not hear from HMRC are asked to wait until 30 April before contacting the SEISS helpline.
The taxpayer must confirm that they meet the criteria for the fourth grant, including that they:
- traded in the tax years 2019/20 and 2020/21;
- are currently trading but are impacted by reduced demand due to coronavirus, or have been trading but are temporarily unable to do so due to coronavirus;
- intend to continue to trade; and
- reasonably believe there will be a significant reduction in their trading profits.
The delay to the claims portal opening reflects the fact that HMRC has needed to incorporate 2019/20 self assessment tax return data into its calculations as the base years are now the four tax years 2016/17 to 2019/20 (where available).
The inclusion of 2019/20 tax return data means that up to 600,000 additional taxpayers who were not entitled to grants one to three may now be eligible for the fourth grant. HMRC has contacted approximately 100,000 of these taxpayers to carry out pre-verification checks; claimants have until 1 June to complete these checks and claim the grant.
Including 2019/20 data also means that a (relatively small) number of taxpayers who were eligible for the first three grants are not eligible for the fourth grant because they now fail one of the eligibility criteria. HMRC has contacted each of these taxpayers.
Even though the grant, like grants one and three, is 80% of three months trading profits capped at £7,500, most taxpayers will find that the amount of the grant they receive is different from previous grants because of the change to the base years.
To qualify for the fourth grant, the taxpayer must have submitted a 2019/20 tax return by 2 March 2021. The requirement to file by this date applies even if the taxpayer has reasonable excuse for late filing (though it might be worth pursuing the point in a very unusual case) and some taxpayers are likely to miss out on the fourth grant by not having filed by this deadline.
HMRC will base its calculations on the tax return data for 2016/17 to 2019/20 held in its systems on 2 March 2021. All 2016/17 to 2019/20 tax returns filed by 2 March 2021 will be taken into account, as will any amendments, assessments or contract settlements made by that date.
Changes to tax returns for any of the relevant tax years which are made after 2 March 2021 and which would reduce the amount of the grant or would cause the taxpayer to be no longer be eligible must be notified to HMRC and the appropriate amount of grant repaid, subject to a deminimis of £100.
This new requirement applies to grant four (and is expected to apply to grant five) and will require careful attention by taxpayers and agents. There was no such requirement for the earlier SEISS grants; amendments after 26 March 2020 are disregarded for grants one to three.
Webinar: SEISS grants update
In this webinar Caroline Miskin, from ICAEW's Tax Faculty, navigates the significant changes to the fifth SEISS grant and covers related tax return and compliance issues.
This guidance is created by the Tax Faculty, recognised internationally as a leading authority and source of expertise on taxation. The Faculty is the voice of tax for ICAEW, responsible for all submissions to the tax authorities. Join the Faculty for expert guidance and support enabling you to provide the best advice on tax to your clients or business.