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Seiss

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Hi 

for the 3rd grant can you claim if you have been told to isolate for 14 days by nhs track and trace or if your kids are having to isolate and you have to stop working for childcare 
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  • Jeremy535897
    Jeremy535897 Posts: 10,732 Forumite
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    It could do. Your profits for the year you are currently in would have to be "significantly reduced" as a result.

    See https://www.gov.uk/guidance/how-your-trading-conditions-affect-your-eligibility-for-the-self-employment-income-support-scheme
  • lysa847
    lysa847 Posts: 17 Forumite
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    Ok does anyone know what is significantly according to hmrc as not working for 2 weeks with no pay is significant to me and paying bills 
  • lysa847
    lysa847 Posts: 17 Forumite
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    My profits are down this year but does it only count for profits to be down nov to jan compared to nov to jan last year
  • Grumpy_chap
    Grumpy_chap Posts: 18,229 Forumite
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    lysa847 said:
    Hi 

    for the 3rd grant can you claim if you have been told to isolate for 14 days by nhs track and trace or if your kids are having to isolate and you have to stop working for childcare 
    These parameters seem to be covered by the criteria / examples given in the link posted by Jeremy under the "temporally unable to trade".  
    There is also the requirements for "reasonable belief" of "significant reduction in profits".  As stated in the linked article, this requires that you "make an honest assessment about whether you reasonably believe your business will have a significant reduction in profits."

    There is further information here:
    https://www.gov.uk/guidance/claim-a-grant-through-the-coronavirus-covid-19-self-employment-income-support-scheme

    This requires that you keep evidence.

    I think the key test will be reasonableness and having a sensible assessment of the impact.  The OP does not say what trade they work in, so needing to self-isolate for 14 days may or may not mean "a significant reduction in profits":
    • The timing of the instruction to self-isolate could be relevant here, as two-weeks self-isolation starting, say, 21st December may have a far less significant impact on profits than two-weeks self-isolation starting, say 30th November.
    • SEISS 3 covers November, December, January.  A period of 13 weeks.  If your work follows a level profile, then 2 weeks is 2 / 13 = 15% and if that is the level of reduction of profits that arises then it is an assessment (judgement call) whether 15% is significant.  Though, you then receive 80% of 3 months' profit as the grant, which means much more in total...
    • The impact of two-weeks self-isolation will vary for different sectors and does not automatically mean the same proportional loss of profit.:
    1. A restaurant closed for two weeks in what would be the peak Christmas party season is a far bigger impact than, say, an Accountant where a fair proportion of work can still be delivered from within self-isolation.  
    2. A business may have control over when work is delivered so can do the "lost" two-weeks work by working extra hours at another time that would not normally be working hours.  Either longer working days or additional working days (e,g, weekend).
    3. A business may be able to tolerate the individual (even a sole-trader) self-isolating by engaging another individual to deliver the work, sub-contracting or similar.  If this is possible then there may be no loss of profits. 

    The OP has not said what they operate their business in, so it is not possible to give more specific comments, other than the general comments of interpretation on the guidance as above.

    I think the big test is going to be one of "reasonableness" and this is best demonstrated by carefully considering the specific circumstance, and recording all the facts that fed into the decision at the time the decision is made, i.e. before claiming.  Having set out the decision, try to step back and take an "arms-length" review of what you have written down and think would the average person think that was reasonable or that you were fabricating circumstances to claim the grant dishonestly.

    Depending upon your type of work, if you are at risk of being covered by IR35, you may want to consider whether claiming because of 2-weeks self-isolation is at odds with the tests for independence.

    The big difference on this round of SEISS is to prevent claims for businesses that are doing fine and really not affected by coronavirus, but were "impacted" (so claimed SEISS 1 & 2) by something inconsequential such as £10 for a pack of face masks.
  • Jeremy535897
    Jeremy535897 Posts: 10,732 Forumite
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    • SEISS 3 covers November, December, January.  A period of 13 weeks.  If your work follows a level profile, then 2 weeks is 2 / 13 = 15% and if that is the level of reduction of profits that arises then it is an assessment (judgement call) whether 15% is significant.  Though, you then receive 80% of 3 months' profit as the grant, which means much more in total...
    Remember that to be significant, you are looking at the whole basis period (which will normally be one year unless there is a change of accounting date) to establish whether the reduction is "significant", not the 13 week period (although this is where the "reduction" has to be).
  • Grumpy_chap
    Grumpy_chap Posts: 18,229 Forumite
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    Thanks Jeremy, I understand your point, but do not necessarily agree.

    This link:
    https://www.gov.uk/guidance/claim-a-grant-through-the-coronavirus-covid-19-self-employment-income-support-scheme
    Includes the part about "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."

    That refers only to the reduction in trading profits in the context of November to January in isolation, with no reference to the whole year.  

    The earlier guidance (withdrawn 2 days ago) ( https://www.gov.uk/government/publications/self-employment-income-support-scheme-grant-extension/self-employment-income-support-scheme-grant-extension ) included the eligibility comments "must have been previously eligible for the Self-Employment Income Support Scheme first and second grant (although they do not have to have claimed the previous grants)".  Although that guidance has been withdrawn, SEISS 2 could be claimed even if the first SEISS grant was not, so it remains logical (for the sake of consistency of approach) that SEISS 3 could be claimed even is SEISS 1 & SEISS 2 were not.

    A business could have been trading up until March (normal conditions) and had order book that carried forward for 9 months before the work dropped off as coronavirus delayed or reduced future / ongoing orders.  So, the impact is in the period November - January.  This reduction in profits might be significant in the context of the period covered by the grant, but not in the context of the whole year.

    As a lay-person, I would certainly say that the reduction in profits, assessed in the context of the period covered by the grant is reasonable approach.  If profits are affected in the context of the whole year, by the reduction in the three-month period, then this is simple the belts-and-braces evidence,  I think the important thing is the requirement to keep records and anyone making a claim should record their decision process ahead of time, keeping it available for future inspection in the (unlikely?) event of audit.

    This is the point where you normally quote the relevant part of HMRC EIM manuals, but I think I can be safe in my "reasonableness" test approach here as I do not expect the HMRC have prepared the tax manual to cover this. :)
  • Jeremy535897
    Jeremy535897 Posts: 10,732 Forumite
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    edited 27 November 2020 at 11:01PM
    You are missing the point. The reduction has to be in the period 1 November 2020 to 29 January 2021, but its significance is based on the basis period (the whole year). There is no manual of course, but there is the latest Treasury Direction, which says:
    "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."


    "4.5. For the purposes of paragraph 4.2—

    “relevant basis period” means a basis period or basis periods in which the qualifying period falls;

    “basis period” has the same meaning as in Chapter 15 of Part 2 of ITTOIA 2005."

    Section 198 ITTOIA 2005 defines basis period as your accounts year (change of accounting date may mean it is less than a year, as may starting or ceasing to trade, but these last two will themselves usually mean no claim is possible, unless there are multiple trades). If your year end is 31 December, you have to look at two basis periods, the year to 31 December 2020, and the year to 31 December 2021 (and you might make your claim before the latter starts).

  • Grumpy_chap
    Grumpy_chap Posts: 18,229 Forumite
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    Thanks Jeremy.

    Given that level of detail in defining the reference period, it is odd that there is no similar level of detail to define the "significant reduction" threshold.

    There is also a practical aspect that many (most?) SEISS claims will be submitted by individuals that are not engaging an Accountant for this purpose.  There would be significant benefit in the assessment period being more obviously defined in the guidance rather than needing to delve as deeply as you have.
  • Jeremy535897
    Jeremy535897 Posts: 10,732 Forumite
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    edited 27 November 2020 at 11:37PM
    I agree. That is why I might have seemed a bit short in my response to you earlier, but it is very clear to me that most people are hopelessly confused about this issue, and I wanted to keep the correct message out there. You are clearly intelligent and now familiar with this stuff, yet you were getting the wrong message. I confess it took me some time to tackle the nuances, and I am heartened by the fact that a Chartered Institute of Tax webinar took the same line as me. (I think it is available to non-members at https://www.tax.org.uk/policy-technical/technical-news/update-self-employment-income-support-scheme-other-recent-covid-19 )

    I think the government was stung by criticism that people who had spent a few pounds on face masks, or lost a small contract, were getting large amounts by way of grants (as highlighted by the Institute of Fiscal Studies), so they have tried to ensure that there now has to be a material impact on someone's business, and it can't be just extra costs. I think they should have lived with "significant" relating to the claim period rather than the underlying basis period(s). Also, as you point out, what is "significant"? Someone with £1,000,000 in the bank earning £1,000 interest, and a little business on the side making £5,000 a year, may not care if that business shuts down for three months, but someone relying on a small business for their livelihood would regard any reduction in business as significant. How do you judge on 1 December 2020 whether you will have a reduction in the period 1 November 2020 to 29 January 2021? If your year end is 30 September, how can you judge by 1 December 2020 whether the impact of a reduction in this period will be significant (if we even knew what that meant) in the context of profits for the year to 30 September 2021?
  • Grumpy_chap
    Grumpy_chap Posts: 18,229 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Combo Breaker
    most people are hopelessly confused about this issue

    I think the government was stung by criticism that people who had spent a few pounds on face masks,
    Including even the Martin Lewis show this week.  Though, there are some other areas he has also been incorrect.

    There definitely need to be guidance on "significant", though the aim here is correct.
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