SEISS 3 "significant reduction in your trading profits"

justwhat

"significant reduction in your trading profits" - I assume this does not include grants or previous seiss payments?
Also "significant" thats a bit sketchy
This looks like its over the whole tax year "Before you make a claim, you must decide if the impact on your business will cause a significant reduction in your trading profits for the tax year you report them in."  Should allow HMRC to claw back if profits are up or same as previous years.

My profits are down for for November and probably December. But up over the tax year if grants and seiss are included 
Also you may not know you are going to have a reduction in profits for the full year until after the claim date.(does that mean if there is doubt claim then pay it back?)

Jeremy535897

There is a lot of detail now:

https://www.gov.uk/guidance/claim-a-grant-through-the-coronavirus-covid-19-self-employment-income-support-scheme
"HMRC expects you to make an honest assessment about whether you reasonably believe your business will have a significant reduction in profits.

To make a claim for the third grant your business must have had a new or continuing impact from coronavirus between 1 November 2020 and 29 January 2021."

As the window from claiming opens on 30 November, you can make this assessment before the period 1 November to 31 January ends.

For more details:

https://www.gov.uk/guidance/how-your-trading-conditions-affect-your-eligibility-for-the-self-employment-income-support-scheme

Nowhere does it talk about full years, year on year comparisons etc. It focuses on the period 1 November to 29 January. Previous SEISS grants relate to earlier periods and are therefore irrelevant.

justwhat

Jeremy535897 said:

Nowhere does it talk about full years, year on year comparisons etc. It focuses on the period 1 November to 29 January. Previous SEISS grants relate to earlier periods and are therefore irrelevant.

I made the assumption based on HMRC  statement  "Before you make a claim, you must decide if the impact on your business will cause a significant reduction in your trading profits for the tax year you report them in." 
eg. if you made a loss in November to December and had no "reduction in your trading profits"  for "tax year you report them in." Then you are NOT entitled to claim? 
Or have i read it wrong?

Jeremy535897

I think you have read it wrong. You do not compare this tax year with last. I take it to mean "will cause a significant reduction in your trading profits for the tax year you report them in compared with what they would have been for the tax year in which you report them in if there was no coronavirus".
Why the phrase "for the tax year you report them in"? For the simple reason that if your year end is, say 30 September, you will report November to January in 2021/22, whereas if your year is 31 March, you will report them in 2020/21.

Baxter100

Yeah I have no idea on this one! The restrictions which have just been introduced will certainly cause me to lose some work over however long they are in place (if I had to put a value I would say 25-35%) however looking at the year as a whole I've actually made significantly more than the last few years (owing to a booming post-lockdown 1 period).

To me it looks as though they have worded this deliberately vague to enable them to claw back money in the future how they see fit, so I'm vary wary about claiming this grant.

Jeremy535897

See https://forums.moneysavingexpert.com/discussion/6219378/more-seiss-doubts#latest

dg121

It seems really obvious to me that this is all about the period of Nov 1 - Jan 29.

Right above the bit where it says "Before you make a claim, you must decide if the impact on your business will cause a significant reduction in your trading profits for the tax year you report them in." 
Is the following:

Reasonable belief

In order to claim, you must reasonably believe that you will suffer a significant reduction in trading profits due to reduced business activity, capacity or demand or inability to trade due to coronavirus during the period 1 November to 29 January 2021. You must keep evidence that shows how your business has been impacted by coronavirus resulting in less business activity than otherwise expected.

This seems obvious and clear to me. It's talking about that three month period. That's the period you asses. There is a potential 4th grant covering another period after that. This is just about Nov - Jan surely?

Grumpy_chap

dg121 said:

It seems really obvious to me that this is all about the period of Nov 1 - Jan 29.

This is the period when the reduction in activity, capacity or demand because of coronavirus has to occur (or continue) to qualify for SEISS 3.

The significant reduction in trading profits has to be assessed across the current basis period, i.e. the business accounting year.

Jeremy535897

dg121 said:

It seems really obvious to me that this is all about the period of Nov 1 - Jan 29.

Right above the bit where it says "Before you make a claim, you must decide if the impact on your business will cause a significant reduction in your trading profits for the tax year you report them in." 
Is the following:

Reasonable belief

In order to claim, you must reasonably believe that you will suffer a significant reduction in trading profits due to reduced business activity, capacity or demand or inability to trade due to coronavirus during the period 1 November to 29 January 2021. You must keep evidence that shows how your business has been impacted by coronavirus resulting in less business activity than otherwise expected.

This seems obvious and clear to me. It's talking about that three month period. That's the period you asses. There is a potential 4th grant covering another period after that. This is just about Nov - Jan surely?

That's the problem. A lot of people have misunderstood. The latest Treasury Direction (the law) says:

4.1. A claim for a payment under SEISS 3 (a “SEISS 3 payment”) must be made in accordance with paragraph 3 of SEISS on or before 29 January 2021.

4.2. Subject to paragraph 4.3, a claim may only be made for a SEISS 3 payment in respect of the period beginning on 1 November 2020 and ending on 29 January 2021 (“the qualifying period”) in relation to a trade—

(a)the business of which has suffered reduced activity, capacity or demand in that period from that which could reasonably have been expected but for the adverse effect on the business of coronavirus or coronavirus disease, and

(b)which the claimant reasonably believes will suffer a significant reduction in trading profits for a relevant basis period from that which would otherwise have reasonably been expected as a result of that reduced activity, capacity or demand."

The relevant basis period is the accounts year. It is not the period 1 November 2020 to 29 January 2021. For most self-employed people, it will be the year to 31 March 2021.

dg121

And no guidance has been given on what constitutes significant reduction in trading profits and if previous SEISS grant amounts count towards trading profits?

I'm one of those in a weird situation where previous tax year was quite reduced from normal due to studying and starting my new biz activity. I would have expected a growth this year but not to the level that the SEISS gave me, so that alone could unfairly make me ineligible for this third grant?

What will the consequences be if they deem you've made a claim that isn't justified? Will it just be a case of paying back that particular grant amount or will they throw on tons of penalties and/or interest too? HMRC can be total soulless vultures and wouldn't be at all surprised if it's the latter rather than the former.

Jeremy535897

Your previous year's results are at most only a guide to whether you expect a significant reduction in this year's profits due to coronavirus, compared with what you would have expected them to be without coronavirus. You don't have to show this year's profits are less than last year's to claim the grant. There can be lots of reasons (like you have mentioned) as to why this would not necessarily be the case.

The MSE guide says:

Let's make it clear here: HMRC has told us it's "not looking to trip people up", so any "eligible people who believe they are affected should claim with confidence".

However, HMRC will come down hard on fraudulent claims. It says it will check claims using a "risk-based" approach and take "appropriate action" to withhold or recover payments found to be dishonest or inaccurate. It says there is "no doubt" it will take action in cases of suspected fraud or an organised criminal attack. 

The guidance says: "If you know you've been overpaid or are not eligible for the grant and do not tell us, you may have to pay a penalty."

People who declared they ceased to trade in 2019/20, thus making themselves clearly ineligible for the grant, have only been asked to explain why the grant is still due, or pay it back, with a generous timetable.