SEISS - Average earnings & grant calculation - Appeal Success?

Jeremy535897

devonconveyancer said:

jjames1985 said:

devonconveyancer said:

Okay, can I have some advice please - I have had self employed status since 5.5.2005.  I had various periods of bona fide employment from 2010 through to 2018, but none of them for longer than 18 - 22 months, and never relinquished my self employed status, just declared NIL SE Income for those years (via my accountant.  Fast forward to 2016/17, I took up employment again 1.10.16 so several months of SE trading profit total £11,145.00.  2017/2018 Tax return declared NIL S/E income as was still employed.  around June 2018 I gave up employment and went back to SE, so some 9 months SE income £13,508 trading profit.  All the calculators I have used say £2,700 as the Regulations apparently say the Grant should only be based on 2018/19 Tax Return in these circumstances.  HMRC said NO!  SEISS calc based on all three tax returns and therefore gave £1,644.  I asked for a review and it took them four weeks to simply repeat their original calculations with absolutely no explanation as to why they had refused to accept the actual Regulation and apply it to my case - anyone know what I can do know or how I can move it forward.  I desperately need the additional monies as there is absolutely no chance of my little business recovering for a long time to come as there is no need for my services at present.  I am endeavouring to set up an alternative SE business but without some cashflow to help it is so difficult :-(

HMRC are right.  You could try for a bounceback loan and UC if you're really struggling with household bills.

I would actually like an explanation as to WHY they are right?   HMRC's guidance at https://www.gov.uk/guidance/how-hmrc-works-out-total-income-and-trading-profits-for-the-self-employment-income-support-scheme#threeyears and particularly the chart headed up "If you did not trade in the tax year 2017 to 2018" support my view, and the calculators provided by a variety of accountants online all support my view so far.  No one will explain to me precisely why the three years' rule should be used when the above link says it should not!  I did not trade in 2017/2018 - it is clear from the my Tax records I was a full time employee!

My post which has crossed with yours explains why, but depends on the answers to the questions I raise.

LilElvis

devonconveyancer said:

jjames1985 said:

devonconveyancer said:

Okay, can I have some advice please - I have had self employed status since 5.5.2005.  I had various periods of bona fide employment from 2010 through to 2018, but none of them for longer than 18 - 22 months, and never relinquished my self employed status, just declared NIL SE Income for those years (via my accountant.  Fast forward to 2016/17, I took up employment again 1.10.16 so several months of SE trading profit total £11,145.00.  2017/2018 Tax return declared NIL S/E income as was still employed.  around June 2018 I gave up employment and went back to SE, so some 9 months SE income £13,508 trading profit.  All the calculators I have used say £2,700 as the Regulations apparently say the Grant should only be based on 2018/19 Tax Return in these circumstances.  HMRC said NO!  SEISS calc based on all three tax returns and therefore gave £1,644.  I asked for a review and it took them four weeks to simply repeat their original calculations with absolutely no explanation as to why they had refused to accept the actual Regulation and apply it to my case - anyone know what I can do know or how I can move it forward.  I desperately need the additional monies as there is absolutely no chance of my little business recovering for a long time to come as there is no need for my services at present.  I am endeavouring to set up an alternative SE business but without some cashflow to help it is so difficult :-(

HMRC are right.  You could try for a bounceback loan and UC if you're really struggling with household bills.

I would actually like an explanation as to WHY they are right?   HMRC's guidance at https://www.gov.uk/guidance/how-hmrc-works-out-total-income-and-trading-profits-for-the-self-employment-income-support-scheme#threeyears and particularly the chart headed up "If you did not trade in the tax year 2017 to 2018" support my view, and the calculators provided by a variety of accountants online all support my view so far.  No one will explain to me precisely why the three years' rule should be used when the above link says it should not!  I did not trade in 2017/2018 - it is clear from the my Tax records I was a full time employee!

Unless you explicitly told them that you had ceased self employment and then told them that you restarted then they are correct in treating your trading as continuous. Not recording a profit doesnt, in itself, mean that you weren't trading as it is possible to trade with no profit or even a loss.

devonconveyancer

Jeremy535897 said:

devonconveyancer said:

Okay, can I have some advice please - I have had self employed status since 5.5.2005.  I had various periods of bona fide employment from 2010 through to 2018, but none of them for longer than 18 - 22 months, and never relinquished my self employed status, just declared NIL SE Income for those years (via my accountant.  Fast forward to 2016/17, I took up employment again 1.10.16 so several months of SE trading profit total £11,145.00.  2017/2018 Tax return declared NIL S/E income as was still employed.  around June 2018 I gave up employment and went back to SE, so some 9 months SE income £13,508 trading profit.  All the calculators I have used say £2,700 as the Regulations apparently say the Grant should only be based on 2018/19 Tax Return in these circumstances.  HMRC said NO!  SEISS calc based on all three tax returns and therefore gave £1,644.  I asked for a review and it took them four weeks to simply repeat their original calculations with absolutely no explanation as to why they had refused to accept the actual Regulation and apply it to my case - anyone know what I can do know or how I can move it forward.  I desperately need the additional monies as there is absolutely no chance of my little business recovering for a long time to come as there is no need for my services at present.  I am endeavouring to set up an alternative SE business but without some cashflow to help it is so difficult :-(

Did your 2016/17 return state a date you ceased your self employment? Did your 2018/19 return state a date you started self employment? Did you complete a SA103S for 2017/18? HMRC have treated you as trading throughout, albeit presumably with nil turnover and expenses in 2017/18, presumably because you never stated your self employment ceased.

No, because I was unsure I was going to stay employed, I did not wish to have re-start the self employed registration process, but it would have shown the date my employment started with all the other relevant info.  There is nothing in their rules and regulations re SEISS that says I have to have stated I was not self employed but it is very clear from the Tax paid via my employee and the amount of earnings that I was indeed a full time employee.  I have no idea re the SA103S as I have an accountant who fills in all the various forms and does the calcs etc.  But their own example (see above link) fits my situation precisely £0 trading profit for the middle of the three years - why should they be going against their own example and including that year when their own example says they should ignore it!

devonconveyancer

BTW thank to you those who suggested BBL, UC, deferrals etc - have done all and everything possible :-), I would really like to sort out the SEISS because it will obviously have a knock on effect to the second payment too :-( .  It's really getting me down because I am still struggling with the local authority council tax department who are continuously sending revised CT bills - I have £94 a week to live on and their last bill said they want £53 a month!  I am trying to give all my attention to the new business and the hassles are really taking over my life and making me so depressed and anxious.

Jeremy535897

You have answered your own question. You did not say you had stopped being self employed at some time in 2016/17, so they have treated you as continuously self employed. The problem you face is not with the guidance (which you quote in your favour) but the underlying legislation in the Treasury Direction, which always takes precedence over guidance. That says:
"10. For the purposes of SEISS, amounts of trading profits and relevant income are determined by reference to a person’s tax returns as at 23 April 2020 but no account will be taken of any amendment made to a tax return on or after 6pm on 26 March 2020 or any contract settlement."

Your returns showed no cessation of self employment by 5 April 2017, and no commencement of self employment from 6 April 2018 or later. You might convince a judge that you didn't trade in 2017/18, but that's not the test. The test is whether your returns, taken together, show you didn't trade in 2017/18, and there is a clear argument that they didn't show that you didn't trade in 2017/18. There are cases of sub contractors incorrectly declaring self employed income as employment income, and being turned down for a grant as a result, when it is quite clearly an error on the tax returns (much more clearly an error than your case, in fact).

Grumpy_chap

devonconveyancer said:

Jeremy535897 said:

Did your 2016/17 return state a date you ceased your self employment? Did your 2018/19 return state a date you started self employment? 

No, because I was unsure I was going to stay employed, I did not wish to have re-start the self employed registration process

I have no idea re the SA103S as I have an accountant who fills in all the various forms and does the calcs etc.  But their own example (see above link) fits my situation precisely £0 trading profit for the middle of the three years

There is a big difference between trading but making no profit and not trading self-employed.

Because you didn't cease and re-start self-employment, HMRC have to conclude that you traded with no profits.  Easy to do if, for example, you invested in a new van.

I don't know why your Accountant cannot explain this to you.

devonconveyancer

Jeremy535897 said:

You have answered your own question. You did not say you had stopped being self employed at some time in 2016/17, so they have treated you as continuously self employed. The problem you face is not with the guidance (which you quote in your favour) but the underlying legislation in the Treasury Direction, which always takes precedence over guidance. That says:
"10. For the purposes of SEISS, amounts of trading profits and relevant income are determined by reference to a person’s tax returns as at 23 April 2020 but no account will be taken of any amendment made to a tax return on or after 6pm on 26 March 2020 or any contract settlement."

Your returns showed no cessation of self employment by 5 April 2017, and no commencement of self employment from 6 April 2018 or later. You might convince a judge that you didn't trade in 2017/18, but that's not the test. The test is whether your returns, taken together, show you didn't trade in 2017/18, and there is a clear argument that they didn't show that you didn't trade in 2017/18. There are cases of sub contractors incorrectly declaring self employed income as employment income, and being turned down for a grant as a result, when it is quite clearly an error on the tax returns (much more clearly an error than your case, in fact).

But if you click the link cited, I fall precisely in to the example cited in their own Regulations and they specifically say that in such circumstances only 2018/2019 should be applied - no one is explaining to me why their own example is not being used?  They show an example :-

"If you did not trade in the tax year 2017 to 2018

We will work out your average trading profit based on the tax year 2018 to 2019 only, even if you traded in the tax year 2016 to 2017.

Example

	2016 to 2017	2017 to 2018	2018 to 2019	Trading profit

Trading profit or loss

£25,000

Did not trade

£45,000

£45,000

That is precisely where I am - the rules do not state that I had to have ceased self employment.  They state "I did not trade" and I did not.  There is nothing that says I have to have ceased self employment.  There is in fact nothing I can find that disproves that I fall precisely in to their own example!  My Income Tax was all paid by the firm of solicitors I was employed by - I would not have been allowed to trade separately, it is a condition of the employment contract so I can prove that I did not trade (I am totally totally honest and above board and have all documentation to prove my Tax info etc for more than 6 years, I never under or over declare, my accountant is scrupulously honest too and would sack me if I even suggested something untoward! - I have my wage slips my P60, everything to prove I was employed.  All the accountancy calculators on line all give exactly the same result when I put £0 in to the middle year (and NOT the HMRC result).  I still feel this is a mis-application given their own example.  Think I will just keep arguing the toss till someone gives in because I genuinely feel they should be applying their own example.  Thanks.

jjames1985

devonconveyancer said:

Jeremy535897 said:

You have answered your own question. You did not say you had stopped being self employed at some time in 2016/17, so they have treated you as continuously self employed. The problem you face is not with the guidance (which you quote in your favour) but the underlying legislation in the Treasury Direction, which always takes precedence over guidance. That says:
"10. For the purposes of SEISS, amounts of trading profits and relevant income are determined by reference to a person’s tax returns as at 23 April 2020 but no account will be taken of any amendment made to a tax return on or after 6pm on 26 March 2020 or any contract settlement."

Your returns showed no cessation of self employment by 5 April 2017, and no commencement of self employment from 6 April 2018 or later. You might convince a judge that you didn't trade in 2017/18, but that's not the test. The test is whether your returns, taken together, show you didn't trade in 2017/18, and there is a clear argument that they didn't show that you didn't trade in 2017/18. There are cases of sub contractors incorrectly declaring self employed income as employment income, and being turned down for a grant as a result, when it is quite clearly an error on the tax returns (much more clearly an error than your case, in fact).

But if you click the link cited, I fall precisely in to the example cited in their own Regulations and they specifically say that in such circumstances only 2018/2019 should be applied - no one is explaining to me why their own example is not being used?  They show an example :-

"If you did not trade in the tax year 2017 to 2018

We will work out your average trading profit based on the tax year 2018 to 2019 only, even if you traded in the tax year 2016 to 2017.

Example

	2016 to 2017	2017 to 2018	2018 to 2019	Trading profit

Trading profit or loss

£25,000

Did not trade

£45,000

£45,000

That is precisely where I am - the rules do not state that I had to have ceased self employment.  They state "I did not trade" and I did not.  There is nothing that says I have to have ceased self employment.  There is in fact nothing I can find that disproves that I fall precisely in to their own example!  My Income Tax was all paid by the firm of solicitors I was employed by - I would not have been allowed to trade separately, it is a condition of the employment contract so I can prove that I did not trade (I am totally totally honest and above board and have all documentation to prove my Tax info etc for more than 6 years, I never under or over declare, my accountant is scrupulously honest too and would sack me if I even suggested something untoward! - I have my wage slips my P60, everything to prove I was employed.  All the accountancy calculators on line all give exactly the same result when I put £0 in to the middle year (and NOT the HMRC result).  I still feel this is a mis-application given their own example.  Think I will just keep arguing the toss till someone gives in because I genuinely feel they should be applying their own example.  Thanks.

Because you didn't tell HMRC that you had ceased self-employment then as far as they are concerned you were trading.  You can keep arguing with them but you're not going to get anywhere, they are applying the rules correctly.

Grumpy_chap

But you did trade as far as HMRC are concerned, unless you informed HMRC that you ceased trading and then restarted trading.  HMRC have no other way to differentiate between 'did not trade' and 'traded at no profit'.

Grumpy_chap

The example you cite is £25k - did not trade - £45k

Your tax returns show £25k - £nil - £45k