More SEISS 3 help needed please

mljg

Hi, 

I have 2 questions regarding SEISS 3. 

1. Do you have to include SEISS 1 and 2 grants as “trading profits” when determining whether reduced demand in Nov-Jan constitutes a significant reduction across the whole tax year? 

I ask as I attended an HMRC webinar on Dec 23rd and asked that question in the chat and was told that they don’t need to be taken into account. (See screenshot). 

However I’m a bit dubious about the reply I got based on what I’ve read here and elsewhere. Your thoughts? 

1. What’s the easiest and fairest way mathematically to calculate whether my reduced demand in Nov-Jan equals a significant reduction across the whole year. Maths is not my strong point!! I was thinking of working out what I’ll earn this tax year and then working out what I’ll lose in Nov-Jan and seeing what percentage my losses were against my earnings to determine if they are “significant”. Unless there is a better way? 

Thanks for your help. 

Jeremy535897

The law seems to say you include the earlier grants, but there have been two sources within HMRC who said otherwise (including yours). The Chartered Institute of Taxation asked HMRC the question in November, and don't seem to have had a reply.

I would be really surprised if HMRC conducted detailed examinations and tried to argue that a reduction in profit was only significant if you excluded the earlier SEISS payments, and therefore the claim for SEISS 3 was invalid. You have to show a reduction in activity, capacity or demand in the period 1 November 2020 to 29 January 2021. It has to be significant in the context of your expected results for the current year. We don't know what "significant" means, but 5% is significant in the context of probability. If you expect your profits for the current year without SEISS to be £25,000, and you reckon your profits for 1 November 2020 to 29 January 2021 are going to be down by £2,000, then you can argue that is significant. If you include SEISS 1 and 2, and what you expect from SEISS 3, your profits might actually be £35,000, but £2,000 is still arguably significant.

I think too many people are overcomplicating this. The aim of the amendments was to eliminate claims based on trivial impact, rather than to discourage genuine claimants for fear of some technical comeback with the benefit of hindsight.

mljg

Thanks Jeremy. Very helpful. 

This gov.uk page seems to be conclusive that previous grants don’t need to be included. This new info must have been added relatively recently. 

Jeremy535897

Thanks for that. I had not appreciated that they had updated it. That is very useful to know. There are so many press releases on this subject. Please type the URL (you won't be able to post a link to it yet).

Grumpy_chap

Well, that seems illogical, but at least it is now clear.

Jeremy535897

I have now found it, in:
https://www.gov.uk/guidance/claim-a-grant-through-the-coronavirus-covid-19-self-employment-income-support-scheme

justwhat

yipppeeee !!!! lol some good news. 

mljg

Sorry to be back again with what’s probably a silly question!

For the purposes of SEISS 3 “trading profits” means what I earned minus my allowable expenses? Or do they mean total income?

Also, In general what’s a more accurate number the average or the median?

 Thanks again. 

Jeremy535897

Trading profits are income less allowable expenses. Median is a type of average so your second question is not a question. If you are asking whether the mean is more accurate than the median, it depends on what data you are looking at.

mljg

Thanks Jeremy. So I’m looking at trading profits - is the monthly mean more accurate than the median?

 Thanks again 

Grumpy_chap

I understand that the profits are assessed across the whole year.  If assessing month by month, that would mean to use the mean average.