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CJRS 7 SEISS over-payments - Your responsibility04-Aug-2020

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The Self-employment Income Support Scheme18-Jun-2020

Please be aware that this note is based on the information publish..

The Self-employment Income Support Scheme

19-Jun-2020

Please be aware that this note is based on the information published as at 18 June 2020 and is intended to provide guidance on how Foremans LLP believe at this juncture the scheme is operating. The information is based on Foremans LLP’s interpretation of the available data. You should not regard this as definitive advice on how the scheme operates as the situation is continually being updated.

The scheme was initially established to provide a grant to self-employed individuals or partnerships worth 80% of their profits per month up to a cap of £7,500 in total. The scheme was available initially for April, May and June 2020. The intention being to provide similar support to the self-employed as the Job Retention Scheme does for employees. SEISS opened for claims on 13 May 2020.

On Friday 29 May 2020 the Chancellor of the Exchequer, Rishi Sunak, announced that the scheme is to be extended to allow those eligible to claim a second grant covering three months’ worth of profits. The Second and Final SEISS Grant is less generous with 70% of the average profits covered up to a maximum of £6,570.

Eligibility:

The eligibility criteria have not been changed for the extended period.

To be eligible you must meet all of the criteria below:

  1. Be self-employed or a member of a partnership;
  2. You traded in the tax year 2018 to 2019;
  3. You submitted your 2018/2019 self assessment to HMRC on or before 23 April 2020;
  4. You traded in tax year 2019/2020;
  5. You intend to continue trading in the tax year 2020/2021;
  6. You carry on a trade which has been adversely affected by coronavirus.

Your business could be adversely affected by coronavirus where:

  1. You are unable to work because you:
  • Are shielding
  • Are self-isolating
  • Are on sick leave because of coronavirus
  • Have caring responsibilities because of coronavirus
  1. You have had to scale down or temporarily stop trading because:
  • Your supply chain has been interrupted
  • You have fewer or no clients
  • Your staff are unable to come into work.

You are NOT eligible for a SEISS grant if you are trading through a limited company.

How to check eligibility

 

Go to:

 

https://www.gov.uk/guidance/claim-a-grant-through-the-coronavirus-covid-19-self-employment-income-support-scheme#eligible

Where there is a “Check Now” button

Enter your personal Unique Tax Reference (UTR) and National Insurance number. You will be advised if you are eligible.

If you are eligible you will be told when you can register your claim.

How to register your claim

If you are eligible you will need:

  • Your personal Government Gateway ID and password. Please be aware that Foremans do not hold these details. If you do not have the details you will need to apply to HMRC for your Gateway ID and password. You can apply when you are checking your eligibility by following the relevant links.
  • UK Bank Account Details, only a bank account that can accept BACS payments, including
    • Bank Account Number
    • Sort Code
    • Name on the account
    • Address linked to the account

The online claims portal for the first round of grant claims for April, May and June 2020 opened on 13 May 2020 and will be closing on 13 July 2020. You should, therefore, register your claim on or before 13 July 2020.

The online claims portal for the second and final round of grant claims is not yet available. Our understanding is that it will be available in August 2020 and the claim mechanism will be the same as for the first round.

 

Log onto the Government Gateway with your ID and password, from the date you can register your claim, and follow the relevant links.

HMRC will calculate the amount you are entitled to and advise you of how much will be paid.

Can I claim the Second Grant if I did not claim the First Grant?

Yes. You do not need to have claimed the First Grant in order to receive the Second Grant. You may, for example, have been adversely affected by COVID-19 in the later months rather than the earlier months.

You can claim the second grant if you are eligible and your business has been adversely affected by coronavirus on or after 14 July 2020.

Grant Calculation

The second grant is not as generous as the first but the profit calculation remains the same.

HMRC should calculate any SEISS grant available as follows:

Step 1

Your trading profits on your 2018/2019 self assessment tax return must be:

  • No more than £50,000
  • At least equal to your non-trading income.

Step 2

If you are eligible under Step 1 HMRC will look at your trading profits and losses for the last 3 tax years as shown on your self assessment tax returns and average the profit.

Example

2016/17

2017/18

2018/19

Average Trading Profit for the 3 Tax Years

Trading Profit /(loss)

£60,000

£60,000

(£30,000)

£30,000

Step 3

The average profit is then divided over 12 months:

Example

£30,000 / 12 = £2,500 per month

Step 4

First Grant – Available up to 13 July 2020

The grant to be paid is the lower of:

  1. 80% of the average profit

Example:

£2,500 X 80% = £2,000 per month

£6,000 for three months

Or

  1. £7,500

In this example the total grant will be £6,000 for April, May and June 2020

Second Grant – Available from 14 July 2020

The grant to be paid is the lower of:

  1. 70% of the average profit (previously 80%)

Example:

£2,500 X 70% = £1,750 per month

£5,250 for the three months

Or

  1. £6,570 (previously £7,500)

In this example the total grant will be £5,250 for July, August and September 2020

If you did not trade in 2016/2017

The average trading profit will be calculated using 2017/2018 and 2018/2019 profit and losses and dividing by 2.

If you did not trade in 2017/2018

The average trading profit will be calculated using 2018/2019 profit only even if you traded in 2016/2017.

Payment

 

The first Grant Payment should be made within 6 working days into your nominated bank account.

The second Grant Payment should be made in August 2020.

 

What do I do if I disagree with HMRC?

 

There are two reasons for disagreement:

  1. Eligibility - If HMRC state that you are ineligible for SEISS.
  1. Grant Amount – You disagree with the amount you have been awarded.

In both cases you need to raise a request for a review through the eligibility checker.

There is an option on the HMRC eligibility checker to complete an online form to request a review of eligibility or the amount awarded.

The first question on the form asks if you are an agent. This is the first point at which Foremans LLP can start to help you with your SEISS claim.

If you wish us as your agent to request a review you should let us know and we can access the review through our agent portal. Alternatively you can continue with the online form yourself.

In order to complete the application for a review we will need:

  • Your grant claim reference
  • Your National Insurance Number
  • Your Unique Tax Reference (UTR)
  • Details as to why you believe the eligibility or amount is incorrect.

We can then assess the information provided by HMRC in their review and advise as to how to proceed.

When are grants taxable?

 

The grant received is not a loan and is only repayable where it has been incorrectly claimed. Amounts received under SEISS, however, will be subject to income tax and National Insurance.

Regardless of the fact that some of the SEISS grant is paid for a period in the 2019/2020 tax year the whole grant will be taxed in 2020/2021 tax year. The grant will need to be declared on the individual’s 2020/2021 Self Assessment Tax Return as Self Employed Income.

The grant should also be recorded as self employed income for any Universal Credit claims. and treated as income received on the day it is paid.

Subcontractors in the construction industry, whose income is usually subject to deductions at source thorough the Construction Industry Scheme (CIS), should be aware that the grant is paid in full and subject to income tax on their 2020/21 Self Assessment Tax Return.

What if I receive a grant and then find I am ineligible?

 

HMRC will have powers to recover SEISS payments which the recipient is not entitled to and charge a penalty in cases of non-compliance.

WARNING

 

The Support Schemes announced by the UK Government are only available directly through HMRC.  If you receive any communication including texts, calls or emails from anyone claiming to be HMRC saying that you are due a tax refund or saying that you can claim financial help PLEASE DO NOT click on any links or provide any personal information. We are aware that there are many scams currently circulating and do not want you to get caught.

 

Further useful information can be found at:

https://www.businesssupport.gov.uk/self-employment-income-support-scheme/

If you would like to discuss any of the issues noted above please contact us on:

01244 625 500 or 01978 364 000

contactus@foremansllp.com

Whilst all due care and attention has been taken in the preparation of these notes no liability can be accepted for any omission or item contained therein.

Foremans LLP

18 June 2020


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