Repaying SEISS grants: "Stopped trading" in 2019/2020 Tax Year

OshG

I write to inform of one way in which the self employed excluded from C-19 financial support and to ask for your help and advocacy for those in my situation.

I'm an owner-operator of a small gardening business. For over 5 years I was working in this trade registered as a sole trader, but incorporated my business in December of 2019 in the hopes of expanding and taking on employees in 2020.

Since the first lockdown we have suffered financial hardship at home.

In the first Lockdown beginning in March 2020, I tried to claim CJRS in order to afford to furlough myself but the RTI (Real Time Information) was not submitted until 9th April 2020. In order to qualify for CJRS backed furlough, I had to have this submitted by 19th March 2020.

Unfortunately, although my accountant had tried to set up a PAYE system to qualify in time, it could not be submitted until there was a PAYE account number issued from HMRC. We (my accountant and I) were also unaware at the time of the rules as this was not set out until around April 20 - 22nd because HMRC had to have the programme written. It was only after this date that the information was drip fed.

 

When inputting the claim for furlough, HMRC would not allow it as I did not clear the rules between March and October. As there was another lockdown in November, the rules were changed and I was able to claim CJRS because of the qualifying date of 29th October 2020. I received the first CJRS support and was able to furlough myself from December 2020.  

With the business not being able to afford to furlough myself in March 2020, the next step was to apply for the Self-employment Income Support Scheme grant. The rules at the time were that the figures would be taken over three years of self-assessment tax returns 2017, 2018 and 2019. HMRC did not allow agents to act on their clients' behalf, so this had to be completed by myself, which means that Agents are not aware of the requirements for qualifying, as this information was not available in the first claim. Again, the programme had to be written and rules were not particularly clear on the stipulations for the claim and could easily be classed as misleading, despite their declarations. After all, I had submitted three previous tax returns and I had been self-employed but not entitled to furlough pay via the PAYE scheme between March and October 2020. The 3 grant applications were all approved and I received the money.

I have been informed by HMRC that I will now need to pay these grants back as I had 'ceased trading' in the year 19/20 when I become incorporated.

I did not intend to mislead HMRC in any way; as I have explained the requirements were not clear at the time of applying.

We also signed up to Universal Credit in March 2020, and waited the 6 week period while spending all our savings, falling behind on rent, council tax and going into debt in order to afford the day-to-day necessities. With the SEISS grants and UC, we have managed to survive, however we are still going deeper into debt as our current income doesn't cover our needs. There are gaping holes in the UC system - for example the housing allowance for this area is only £449.99 per month, however our rent and council tax combined are over £1000; this is not the core subject of my email but hopefully demonstrates how vitally necessary the support of these grants has been. For the months I was in receipt of the SEISS grants this affected my UC entitlement, which I am hoping the difference can now be repaid to assist (I'm currently waiting to hear back about whether this is the case).

If I understand the rules properly, had I not incorporated my business at the time I did I would be fully entitled to either of these grant schemes. Absolutely nothing else about my situation has changed. HMRC claiming these grants back from me puts us in further hardship and makes our recovery from the effects of C-19 so much more difficult.

Many thanks for taking the time to read this. My hope is that we can put this in front of more people and pressure the Chancellor to do something about supporting struggling SMEs.

zzyzx1221

What about the Bounceback Loan? Did you not apply for that?

Unsure exactly why a gardening business would be impacted by COVID particularly, you're working entirely outdoors.

Dazed_and_C0nfused

One of the conditions right from the outset was that you must have contributed trading into 2020:21.

That clearly wasn't the case and you have, unwittingly or otherwise, claimed a grant you were not entitled to.  In the circumstances you describe I cannot see that anyone will think it unreasonable for you to have to pay the SEISS grant back.

poppy12345

OshG said:

I'm an owner-operator of a small gardening business.

I don't understand why you haven't been able to work. My son is a self employed landscape gardener and has work all through the pandemic. He's been so busy he had to employ 4 people. There were some delays with deliveries sometimes but he worked around that and his clients were understanding but he continued to work. He's been so busy he's had to turn work down because he couldn't cope with the demand. He has very little face to face contact with his clients and payments are made through bank transfer., where possible.

Pennywise

Unfortunately, you've been a victim of circumstance.  Your sole trader business DID cease hence you weren't entitled to the SEISS grants (when a sole trader becomes a limited company it is a cessation of the sole trader in terms of tax and other laws).  Again, it's unfortunate that your PAYE scheme wasn't set up in time - HMRC usually process new schemes within a week or two, so no idea why yours took 4 months or so.  But there's nothing you can do in either case - The Treasury and HMRC are playing hardball and saying "rules are rules" and I've not heard of a single case of a concession being made.

calcotti

OshG said: There are gaping holes in the UC system - for example the housing allowance for this area is only £449.99 per month, however our rent and council tax combined are over £1000; 

The housing element of UC is not intended to help you pay your Council Tax. There is a separate benefit for that called Council Tax Reduction which is administered by your local authority (who can vary the rules so these are not standardised).

OshG said:.. but hopefully demonstrates how vitally necessary the support of these grants has been. 

The support provided by the benefits system without grants is what many people have to rely on and is set at the level determined by the government. Unfortunately most of the time people who do not rely on it pay little regard to the level of support provided.