SEISS 4 "Significant reduction in trading profits"?

ProDave

Define "significant"?

To apply, you’ll need to reasonably believe there is a significant reduction in your trading profits due to coronavirus between February 2021 and April 2021, and that you intend to continue to trade.

Well I just added up my average profit for the last 3 months, and it came out at 65% of my average profit for the last 5 years.

Is that "significant" or not?

SpiderLegs

Yes it is.

unholyangel

As I recall, the test is not comparing profit this year against profit of earlier years. It's profit for that 3 month period versus what you would expect to have earned for that 3 month period, if not for covid (and whether there has been a significant reduction to that profit). 

However, IMO a comparison of those 3 months against the same 3 months in each of the previous years (separately & aggregate) could be a good comparison to document and retain to support the "reasonable belief" if a business were unable to show specific cancellations due to covid (which is likely with how long this has now gone on for). 

Jeremy535897

It's like SEISS 3:

"Reasonable belief

In order to claim the fourth grant, you must reasonably believe that you’ll suffer a significant reduction in trading profits, due to reduced business activity, capacity, demand or inability to trade due to coronavirus between 1 February 2021 and 30 April 2021. You must keep evidence that shows how your business has been impacted by coronavirus resulting in less business activity than otherwise expected.

HMRC expects you to make an honest assessment about whether you reasonably believe your business will have a significant reduction in profits.

Significant reduction

Before you make a claim, you must decide if the impact on your business between 1 February 2021 and 30 April 2021 will cause a significant reduction in your trading profits for the tax year you report them in.

HMRC cannot make this decision for you because your individual and wider business circumstances will need to be considered when deciding whether the reduction is significant.

You should wait until you have a reasonable belief that your trading profits are going to be significantly reduced, before you make your claim.

You do not have to consider any other coronavirus scheme support payments that you have received when deciding if you’ve had a significant reduction in your trading profits."

From https://www.gov.uk/guidance/claim-a-grant-through-the-coronavirus-covid-19-self-employment-income-support-scheme

Technically you don't compare with the previous year, but if your profits have dropped significantly compared with last year, and there is no explanation other than coronavirus, this would be useful evidence to support your claim.

stulaunch

Jeremy535897 said:

It's like SEISS 3:

Significant reduction

Before you make a claim, you must decide if the impact on your business between 1 February 2021 and 30 April 2021 will cause a significant reduction in your trading profits for the tax year you report them in.

So, February & March are in a different tax year to April. Surely it's impossible to forecast if one months impact (April) will cause a "significant" reduction in 2021-2022's trading profits? 

Patr100

For SEISS 4, I was unable to do my self employed work because the venue was closed during lockdown.
How can I "keep appropriate records as evidence of the impact on your business." when I had absolutely no income to the business , there's no paperwork for that, other than my assertion  that I earned nothing compared to previous years.

Jeremy535897

stulaunch said:

Jeremy535897 said:

It's like SEISS 3:

Significant reduction

Before you make a claim, you must decide if the impact on your business between 1 February 2021 and 30 April 2021 will cause a significant reduction in your trading profits for the tax year you report them in.

So, February & March are in a different tax year to April. Surely it's impossible to forecast if one months impact (April) will cause a "significant" reduction in 2021-2022's trading profits? 

I would agree that, if you make your accounts up to 31 March or 5 April, the test is a particularly difficult one.

MattMattMattUK

Patr100 said:

For SEISS 4, I was unable to do my self employed work because the venue was closed during lockdown.
How can I "keep appropriate records as evidence of the impact on your business." when I had absolutely no income to the business , there's no paperwork for that, other than my assertion  that I earned nothing compared to previous years.

Your bank statements and accounts would show that you did not trade during that period. That, combined with a simple note that states that the venue was closed during the relevant period would be enough of a record.

stulaunch

It's a tricky one for me. Feb and March were pretty quiet but April has been not to bad. My year end is March 31.

MattMattMattUK

stulaunch said:

It's a tricky one for me. Feb and March were pretty quiet but April has been not to bad. My year end is March 31.

What would you say you have achieved in percentage terms of pervious years / expected turnover if Covid had not happened?