SEISS - Average earnings & grant calculation - Appeal Success?

tommyt-saver

Jeremy535897 said:

tommyt-saver said:

I'm just surprised that they didn't use the '50% of income in 2018/2019 to be eligible' rule across all tax years, and to exclude any years where it fell lower when calculating the average. It would have been one extra line of code, but would have represented a truer/fair average SE income and supported much more people in a time of need. 

We can have all sorts of opinions. I don't see the logic of the £50,000 cap, the 50% test, or the treatment of part years as full years. The first two vastly increased complexity for no good reason, and the third could easily have been dealt with by just averaging best 2 out of 3, which would remove distortions caused by part years and uneven capital investment. But it doesn't matter what we think. We might not think paying 20% tax is fair, but there's not much point in appealing against its imposition!

I'm in full agreement with you with those points, apart from discouraging people from appealing. I know there's no chance they'll change anything due to workload and the costs, but voices need to be heard and the extra workload it causes in the system is something that has come with the lack of foresight and rigidity of the rules.
To use your point about genuine claims and tax analogy, If they increased the income tax to 25% say (which I wouldn't be surprised soon) i'd be encouraging people to protest in the streets to have their voices heard, and then worrying if they are temporarily blocking the traffic that needs to get through. 

fazer169

I believe that I am eligible for 18/19 as I meet the criteria but have been denied as my average over my two years of trading was less than 50%.  I believe that this is incorrect and have written to ask them to look at it again (see below).  

You state that I am ineligible because the sum of my non-trading income for the tax years 2017 to 2018 and 2018 to 2019 was more than the sum of my trading profits for those years.  I am sorry but I do not agree with your assessment as you should not be adding these years together.

You should only be looking at all years to work out the amount of grant not the eligibility. 

The guidance on the HMRC website https://www.gov.uk/guidance/claim-a-grant-through-the-coronavirus-covid-19-self-employment-income-support-scheme#howmuch states;

 “Eligibility

If you have traded for all 3 years we will first look at your 2018 to 2019 Self Assessment tax return. Your trading profits must be no more than £50,000 and at least equal to your non-trading income.” 

 My self-employed income for 2018 to 2019 did exceed my non-trading income.

 It goes on to say that if I am not eligible then you will look at other years.

 “If you’re not eligible based on the 2018 to 2019 Self Assessment tax return, we will then look at the tax years 2016 to 2017, 2017 to 2018, and 2018 to 2019.”

 According to the guidance you should not be looking at the average of all years unless I am ineligible based on the 2018 to 2019 figures.

 This is also borne out by the information on the Moneysavingexpert website https://www.moneysavingexpert.com/news/2020/04/self-employed-help-coronavirus/ which it claims has been produced during discussions and with the full support of government.  I have set out this guidance below;

 You must earn more than 50% of your total income from self-employment. This must have been the case for either your 2018/19 tax return or, if not, the average of your 2016/17, 2017/18 and 2018/19 tax returns. Income from property, dividends, savings, pensions and taxable benefits all count as "non-trading income" and to qualify for the SEISS. The total of these combined must NOT exceed 50% of your total income. For more information on which benefits count as "taxable income", see our full list here.

 

• Your average trading profit must be less than £50,000/year. This is essentially a 'cliff-edge' requirement – so those whose average annual trading profit is more than £50,000 (to be specific, £50,000.01 and above) won't be able to get any support from this scheme.

For both these requirements, the Government says it will first check your 2018/19 tax return – if you met the requirements that year, you'll be eligible.

However, if you earned more than £50,000 (or earned less than half of your income from self-employment) in 2018/19, the Government will then check your 2016/17 and 2017/18 tax returns, if you filed them for those years. If on average over the three years you earned less than £50,000 and made more than half your income from self-employment, you'll still be eligible.

 

I would respectfully request that carry out a further assessment.

[Deleted User]

@fazer169
I believe that you are correct in that HMRC should not average amounts of self-employed vs non-self-employed in relation to eligibility, you should be able to claim based on 18/09, so long as in 18/09 more than 50% of your income was from eligible self-employment and your average trading profit was below £50,000.

The part that I believe you are incorrect on is calculating the grant. You said "You should only be looking at all years to work out the amount of grant not the eligibility.", however that is incorrect, the grant is calculated based on eligible years, so if 17/18 was not an eligible year then it will not be included in the calculation, they would only use 18/19.

If you want anyone to check the figures then let us know the amount of eligible self-employed trading profit in the last three years, plus the total for your other sources of income in those years, broken down by year and someone can check your figures. 

Jeremy535897

MadMattUK said:

@fazer169
I believe that you are correct in that HMRC should not average amounts of self-employed vs non-self-employed in relation to eligibility, you should be able to claim based on 18/09, so long as in 18/09 more than 50% of your income was from eligible self-employment and your average trading profit was below £50,000.

The part that I believe you are incorrect on is calculating the grant. You said "You should only be looking at all years to work out the amount of grant not the eligibility.", however that is incorrect, the grant is calculated based on eligible years, so if 17/18 was not an eligible year then it will not be included in the calculation, they would only use 18/19.

If you want anyone to check the figures then let us know the amount of eligible self-employed trading profit in the last three years, plus the total for your other sources of income in those years, broken down by year and someone can check your figures. 

No. Fazer is correct. Just dealing with the 50% test and grant calculation (so assuming profits under £50,000) for someone trading throughout 2016/17 to 2018/19, the steps are as follows:
A. Is 2018/19 trading income at least equal to 2018/19 other taxable income? If yes, go to C. If not, go to B.
B Is 2016/17, 2017/18 and 2018/19 trading income in total at least equal to 2016/17, 2017/18 and 2018/19 other taxable income in total? If yes, go to C. If not, no grant.
C Calculate grant based on trading income for 2016/17, 2017/18 and 2018/19 divided by 36 times 3 times 80% capped at £7,500 (for first grant). It does not matter that for, say, 2017/18 trading income was exceeded by other taxable income.

Jeremy535897

tommyt-saver said:

Jeremy535897 said:

tommyt-saver said:

I'm just surprised that they didn't use the '50% of income in 2018/2019 to be eligible' rule across all tax years, and to exclude any years where it fell lower when calculating the average. It would have been one extra line of code, but would have represented a truer/fair average SE income and supported much more people in a time of need. 

We can have all sorts of opinions. I don't see the logic of the £50,000 cap, the 50% test, or the treatment of part years as full years. The first two vastly increased complexity for no good reason, and the third could easily have been dealt with by just averaging best 2 out of 3, which would remove distortions caused by part years and uneven capital investment. But it doesn't matter what we think. We might not think paying 20% tax is fair, but there's not much point in appealing against its imposition!

I'm in full agreement with you with those points, apart from discouraging people from appealing. I know there's no chance they'll change anything due to workload and the costs, but voices need to be heard and the extra workload it causes in the system is something that has come with the lack of foresight and rigidity of the rules.
To use your point about genuine claims and tax analogy, If they increased the income tax to 25% say (which I wouldn't be surprised soon) i'd be encouraging people to protest in the streets to have their voices heard, and then worrying if they are temporarily blocking the traffic that needs to get through. 

It's not that they can't entertain appeals due to workload or costs. They can't entertain appeals that are utterly groundless. It just wastes their time and our money, and delays them dealing with the appeals that are justified. There is no point in going to court because you don't think it is right that you should have to wear a seat belt when driving a car on a public road, no matter how passionately you might believe that it is an unwarranted restriction of civil liberties, for example. By all means stand outside Parliament with a placard, so long as you keep yourself at least 2 metres apart from all the other protesters.

[Deleted User]

@Jeremy535897
Thanks for the correction, that is interesting. 

tommyt-saver

Jeremy535897 said:

tommyt-saver said:

Jeremy535897 said:

tommyt-saver said:

I'm just surprised that they didn't use the '50% of income in 2018/2019 to be eligible' rule across all tax years, and to exclude any years where it fell lower when calculating the average. It would have been one extra line of code, but would have represented a truer/fair average SE income and supported much more people in a time of need. 

We can have all sorts of opinions. I don't see the logic of the £50,000 cap, the 50% test, or the treatment of part years as full years. The first two vastly increased complexity for no good reason, and the third could easily have been dealt with by just averaging best 2 out of 3, which would remove distortions caused by part years and uneven capital investment. But it doesn't matter what we think. We might not think paying 20% tax is fair, but there's not much point in appealing against its imposition!

I'm in full agreement with you with those points, apart from discouraging people from appealing. I know there's no chance they'll change anything due to workload and the costs, but voices need to be heard and the extra workload it causes in the system is something that has come with the lack of foresight and rigidity of the rules.
To use your point about genuine claims and tax analogy, If they increased the income tax to 25% say (which I wouldn't be surprised soon) i'd be encouraging people to protest in the streets to have their voices heard, and then worrying if they are temporarily blocking the traffic that needs to get through. 

It's not that they can't entertain appeals due to workload or costs. They can't entertain appeals that are utterly groundless. It just wastes their time and our money, and delays them dealing with the appeals that are justified. There is no point in going to court because you don't think it is right that you should have to wear a seat belt when driving a car on a public road, no matter how passionately you might believe that it is an unwarranted restriction of civil liberties, for example. By all means stand outside Parliament with a placard, so long as you keep yourself at least 2 metres apart from all the other protesters.

Haha.. Hear hear! 

fazer169

I have now applied for my third reassessment.   
The first assessment said incorrectly that I hadn't submitted any tax returns.  The second quoted figures from someone else's tax returns.
For the second assessment. they have jumped straight to condition C and said that I am ineligible because my average non self employed income is more and completely ignored the fact that I am eligible under condition A as my self employed income for 2018/19 was more than my other income.  Anything out of the ordinary they cant deal with.  I do wonder how many have applied and been turned down unfairly and they haven't pursued it.

fazer169

Jeremy535897 said:

MadMattUK said:

@fazer169
I believe that you are correct in that HMRC should not average amounts of self-employed vs non-self-employed in relation to eligibility, you should be able to claim based on 18/09, so long as in 18/09 more than 50% of your income was from eligible self-employment and your average trading profit was below £50,000.

The part that I believe you are incorrect on is calculating the grant. You said "You should only be looking at all years to work out the amount of grant not the eligibility.", however that is incorrect, the grant is calculated based on eligible years, so if 17/18 was not an eligible year then it will not be included in the calculation, they would only use 18/19.

If you want anyone to check the figures then let us know the amount of eligible self-employed trading profit in the last three years, plus the total for your other sources of income in those years, broken down by year and someone can check your figures. 

No. Fazer is correct. Just dealing with the 50% test and grant calculation (so assuming profits under £50,000) for someone trading throughout 2016/17 to 2018/19, the steps are as follows:
A. Is 2018/19 trading income at least equal to 2018/19 other taxable income? If yes, go to C. If not, go to B.
B Is 2016/17, 2017/18 and 2018/19 trading income in total at least equal to 2016/17, 2017/18 and 2018/19 other taxable income in total? If yes, go to C. If not, no grant.
C Calculate grant based on trading income for 2016/17, 2017/18 and 2018/19 divided by 36 times 3 times 80% capped at £7,500 (for first grant). It does not matter that for, say, 2017/18 trading income was exceeded by other taxable income.

In my case I didnt trade in 2016/17 so I am assuming that the grant is based on the average divided by 24.  If not then I will be in for another fight on the amount assuming that they capitulate.

If you did not trade in the tax year 2016 to 2017

To work out your average trading profit we add together all profits and losses for the tax years 2017 to 2018 and 2018 to 2019, then divide by 2.

Example

	2016 to 2017	2017 to 2018	2018 to 2019	Average trading profit for the 2 tax years
Trading profit or loss	Did not trade	£25,000	£45,000	£35,000

fazer169

The calculation should be based on; 

6.1 The amount of the SEISS payment is the lower of-

(a) £7,500, and

(b) 3×(𝑇𝑃12×80%).

6.2 In paragraph 6.1, TP is–

(a) except where the person is subject to the loan charge, determined by the first to apply of the following paragraphs-

(i) if the person carried on a trade in the tax years 2016-17, 2017-18 and 2018-19, the average trading profits of those tax years,

(ii) if the person did not carry on a trade in the tax year 2016-17, the average trading profits of the tax years 2017-18 and 2018-19, and

(iii) if the person did not carry on a trade in the tax year 2017-18, the trading profits of the tax year 2018-19