Does receiving an SEISS grant force you to close a Working Tax Credit claim?

Hermann

Just noticed on the HMRC site the following...

You will need to report the grant:

• on your Self Assessment tax return for tax year 2020 to 2021
• as self-employed income for any Universal Credit claims
• as self-employed income and that you’re working 16 hours a week, as changes to your tax credits claims

On this page https://www.gov.uk/guidance/claim-a-grant-through-the-self-employment-income-support-scheme

 That seems to be an instruction that you have to report a reduction to 16 hours if you claim an SEISS grant, regardless of the hours actually worked.

This would end the Working Tax Credit claim, with no way back, of an adult 25-59 as the minimum hours to claim are 30 hours.

Is this really the case? Anyone have any further info on this?

calcotti

That makes no sense and appears to conflict with this 
https://www.gov.uk/changes-affect-tax-credits says

If your working hours fall because of coronavirus (COVID-19)
You do not need to report any fall in your working hours as a result of coronavirus (for example you’re working fewer hours or have been put on furlough).
You’ll be treated as if you’re working your normal hours until the Coronavirus Job Retention Scheme closes.
You should still report any changes in income, childcare and increase in hours in the normal way. You must tell HMRC if you:

• are made redundant

• lose your job

• are self-employed and stop trading

unholyangel

It would appear if you are self employed and still trading and making money, they will treat you as working your normal hours. But if you stop trading entirely, that would affect your claim as you would then fail to meet the qualifying work (for remuneration) requirement.

Employees don't have that issue as the funding for them is paid to the employer, who then pays it to the employee under the contract of employment - so it counts as remuneration for the purpose of the regulations. While self employed are receiving the funds personally and the funds are not in the course of their trade/employment - so if they're not in receipt of trading income as well, theyre not receiving any qualifying remuneration. 

calcotti

unholyangel said:

It would appear if you are self employed and still trading and making money, they will treat you as working your normal hours. But if you stop trading entirely, that would affect your claim as you would then fail to meet the qualifying work (for remuneration) requirement.

Employees don't have that issue as the funding for them is paid to the employer, who then pays it to the employee under the contract of employment - so it counts as remuneration for the purpose of the regulations. While self employed are receiving the funds personally and the funds are not in the course of their trade/employment - so if they're not in receipt of trading income as well, theyre not receiving any qualifying remuneration. 

But someone who is claiming SEISS has not stopped trading.

Jeremy535897

It would be interesting to know what this guidance used to say. I can't remember seeing it before.

I don't like this either:

"You should also keep any evidence that your business has been adversely affected by coronavirus such as:

• business accounts showing a reduction in turnover
• confirmation of any coronavirus-related business loans you have received
• dates your business had to close due to lockdown restrictions
• dates you or your staff were unable to work due to coronavirus symptoms, shielding or caring responsibilities due to school closures"

How does a reduction in turnover necessarily evidence an adverse effect from coronavirus? What if your business receives a boost around Christmas? What if the £10,000 small business grant outweighed your losses? We have had people asking whether they should turn down work to show that their business has been affected, and I have said I don't think that makes any sense. When we need to get the country back on its feet such behaviour is the last thing government needs to be encouraging.

calcotti

It looks as if it already said this when first published on 13th May
https://web.archive.org/web/20200517013335/https://www.gov.uk/guidance/claim-a-grant-through-the-self-employment-income-support-scheme

Jeremy535897

calcotti said:

It looks as if it already said this when first published on 13th May
https://web.archive.org/web/20200517013335/https://www.gov.uk/guidance/claim-a-grant-through-the-self-employment-income-support-scheme

Perhaps that's why people have been asking whether they need to turn work away. There seem to be many different bits of guidance now, covering things from a slightly different angle. It was much simpler with 2 for CJRS and 1 for SEISS.

It's also not obvious whether you need to report the grant as part of your business profits, or on a separate SA103S. At least it seems to settle the issue of when it is taxed.

calcotti

See also this https://www.gov.uk/business-coronavirus-support-finder/y/england/0_to_249/under_85k/no/yes/none/no

Self-Employment Income Support Scheme
If you are self-employed (either as an individual or in a partnership), you can claim a taxable grant worth 80% of your trading profits up to a maximum of £2,500 per month, for 3 months. This may be extended.
You may be eligible for this scheme if:

• you’ve lost profits due to coronavirus

• you’ve submitted your Self Assessment tax return for 2018 to 2019 tax year

• you traded in 2019 to 2020 tax year

• you are trading when you apply, or would be except for coronavirus

• you intend to continue trading in 2020 to 2021 tax year

• your trading profits have been no more than £50,000 for either 2018 to 2019 tax year, or as an average of last 3 financial years

• your trading profits have been more than half of your total income for either 2018 to 2019 tax year, or as an average of last 3 financial years

Not very consistent is it.

calcotti

HMRC are consulting on draft legislation dealing with taxation of CJRS and SEISS https://www.gov.uk/government/consultations/draft-legislation-taxation-of-coronavirus-covid-19-support-payments
The draft explanatory memorandum says

103. The Schedule provides HMRC with compliance and enforcement powers in order to ensure that the schemes it is responsible for are administered properly and protected from fraudulent claims. The provisions therefore make clear that HMRC can use its information and inspection powers to check a SEISS or CJRS claim has not been overpaid and that a CJRS payment has been used to pay employee costs, PAYE, National Insurance contributions (NICs) and make pension contributions.

104. HMRC will also, through these provisions, have the power to recover payments, by imposing a 100% tax charge, from anyone who has received a payment under the Schemes to which they are not fully entitled or anyone who has not used a CJRS payment to pay employee costs, PAYE, NICs and make pension contributions, and to charge a penalty where HMRC can demonstrate that an applicant has behaved deliberately.

Jeremy535897

Thanks @calcotti for this. At least there are some answers about how to declare the receipt of SEISS. I am a bit baffled by the bit about partnerships, as the guidance clearly says that even if a partner has to account to the partnership for the grant, the partner is entitled to be paid for it out of the partnership, so it would always be added to the partner's share.

In view of the fact that there seems to be confusion about just what is covered by "adversely affected" by coronavirus, all we can do is go back to the Direction itself:
"3.3 A claim may only be made in relation to a trade the business of which has been adversely affected by coronavirus or coronavirus disease."
"4.2 The person must- (a) carry on a trade the business of which has been adversely affected by reason of circumstances arising as a result of coronavirus or coronavirus disease, (b) have delivered a tax return for a relevant tax year on or before 23 April 2020, (c) have carried on a trade in the tax years 2018-19 and 2019-20, (d) intend to continue to carry on a trade in the tax year 2020-21, (e) if that person is a non-UK resident or has made a claim under section 809B of ITA 2007 (claim for remittance basis to apply), certify that the person’s trading profits are equal to or more than the person’s relevant income for any relevant tax year or years, (f) be an individual, and (g) meet the profits condition."

"Adversely affected" should therefore be given its natural meaning. Unless you make PPE for example, most businesses affected by coronavirus will have been adversely affected. If you have lost work or orders that you pick up again after the pandemic is over, your business has still been adversely affected by coronavirus (and how are you supposed to see into the future when you make your claim?). If you are a sub contractor that lost a week's work due to coronavirus, your business has been adversely affected. Maybe you did the work 2 weeks later when otherwise you would have taken holiday, so you are actually no worse off. How can that be checked?

unholyangel

calcotti said:

unholyangel said:

It would appear if you are self employed and still trading and making money, they will treat you as working your normal hours. But if you stop trading entirely, that would affect your claim as you would then fail to meet the qualifying work (for remuneration) requirement.

Employees don't have that issue as the funding for them is paid to the employer, who then pays it to the employee under the contract of employment - so it counts as remuneration for the purpose of the regulations. While self employed are receiving the funds personally and the funds are not in the course of their trade/employment - so if they're not in receipt of trading income as well, theyre not receiving any qualifying remuneration. 

But someone who is claiming SEISS has not stopped trading.

I think perhaps you're thinking trading as in stopping their self employment/profession rather than trading as an activity (aka "working"). 

That is, unless you're trying to say that a self employed person trades 24 hours a day, 7 days a week?