More SEISS doubts

justwhat

So the grants do count as trading profit for seiss 3? (unless offset with expenditure before year end)

clear as mud rofl

Jeremy535897

I think they are part of trading profits. People originally asked "can I qualify for SEISS 3 when the grants mean my profit this year is more than last year?", to which I said "that's the wrong question. You don't compare this year's profits with last year's profits (although last year might give an indicator as to what you might expect this year)." But in establishing what trading profits you are using to see whether you have a "significant reduction" of them, I think they include grants.

 I still think there is a danger of over thinking this, though. If you lose two weeks of income because your shop is shut because of lockdown, I think that is "significant", whether you look at trading profits with or without grants. Equally, two days of lost income is not, unless you only trade for a few days a year.

Grumpy_chap

Jeremy535897 said:

• basis period trading profits (if your year end is 31 March), 

if your year end is, say 30 September, you don't have to bring in SEISS 1 or 2 or the property based grants in looking at the trading profits for your current basis period, but you are supposed to guess what your profits are for the year to 30 September 2021.

SEISS is only available to a sole-trader.  Declarations are only made through the tax return, so the vast majority of sole-traders (so far as I am aware) align their accounting year to match the fiscal year, so year-end either 31st March or 5th April.  Using anything else for the basis period for a sole trader add extra complexity and little gain, though can allow deferral of tax payments.

How many sole-traders use an accounting year-end other than the tax-year, and do not have an Accountant?  (Assuming that any sole-trader who engages and Accountant will simply request the Accountant to provide guidance on determining factors such as SEISS 3 eligibility and won't be getting concerned with the minutia themselves.)

For the purposes of this discussion, considering a year-end not aligned with the tax year may be a technicality this is an over-complication.

Jeremy535897

Grumpy_chap said:

Jeremy535897 said:

• basis period trading profits (if your year end is 31 March), 

if your year end is, say 30 September, you don't have to bring in SEISS 1 or 2 or the property based grants in looking at the trading profits for your current basis period, but you are supposed to guess what your profits are for the year to 30 September 2021.

SEISS is only available to a sole-trader.  Declarations are only made through the tax return, so the vast majority of sole-traders (so far as I am aware) align their accounting year to match the fiscal year, so year-end either 31st March or 5th April.  Using anything else for the basis period for a sole trader add extra complexity and little gain, though can allow deferral of tax payments.

How many sole-traders use an accounting year-end other than the tax-year, and do not have an Accountant?  (Assuming that any sole-trader who engages and Accountant will simply request the Accountant to provide guidance on determining factors such as SEISS 3 eligibility and won't be getting concerned with the minutia themselves.)

For the purposes of this discussion, considering a year-end not aligned with the tax year may be a technicality this is an over-complication.

More than you think, I suspect, and as accountants can't file SEISS claims, people have been very hands on. My point though was to emphasise that the rules are not very sensible.

Grumpy_chap

Jeremy535897 said:

the rules are not very sensible.

Agreed

EDIT: Given the clear ambiguity about what constitutes "significant" reduction in profits, and the claims do not open until next week but are then open for 2 months, it may be prudent to hold off making a claim straightaway.  Hopefully, the relevant professional bodies will feed back to Government and better guidance will be forthcoming on both what is "significant" and how the SEISS grants 1 & 2 are to be assessed in determining the reduction of profits.

Jeremy535897

Grumpy_chap said:

Jeremy535897 said:

the rules are not very sensible.

Agreed

EDIT: Given the clear ambiguity about what constitutes "significant" reduction in profits, and the claims do not open until next week but are then open for 2 months, it may be prudent to hold off making a claim straightaway.  Hopefully, the relevant professional bodies will feed back to Government and better guidance will be forthcoming on both what is "significant" and how the SEISS grants 1 & 2 are to be assessed in determining the reduction of profits.

I would agree, except for cases where the outcome is not in doubt (for example premises forced to close in the current lockdown).

lisastevo

So are we now thinking that being up on profits including the grants makes us ineligible even though actual trading profits are down?

justwhat

lisastevo said:

So are we now thinking that being up on profits including the grants makes us ineligible even though actual trading profits are down?

Looks that way. unless you can accumulate a load of expenditure 
Having too much money is a bummer lol 

Jeremy535897

justwhat said:

lisastevo said:

So are we now thinking that being up on profits including the grants makes us ineligible even though actual trading profits are down?

Looks that way. unless you can accumulate a load of expenditure 
Having too much money is a bummer lol 

No. You look at the reduction for 1 November to 29 January, and decide whether it is significant in the context of your profits for the basis period (normally the year to 31 March 2021). Yes, that profits figure does appear to include the grants (and it may be this is clarified in due course), but if your reduction due to coronavirus is still, say, 4 weeks closed due to lockdown, that will clearly be significant. Somewhere between the loss of 2 days and 5 days of income is apparently significant, according to HMRC guidelines.

You do not say "Oh dear I can't claim SEISS 3 because if I include the grants, my profits for the year to 31 March 2021 are more than my profits for the year to 31 March 2020".

justwhat

Jeremy535897 said:

You do not say "Oh dear I can't claim SEISS 3 because if I include the grants, my profits for the year to 31 March 2021 are more than my profits for the year to 31 March 2020".

but if you are 10k over due to seiss1/2 and the property grant compared to profits for 2019/2020 tax year. And you expected to make same as previous years then you would not be entitled to seiss 3 . Even though you are down nov to jan.