Seiss 4- reduction in profits compared to?

graduate2012

Hi all

Hope someone might be able to help clear up some confusion for me

My husband in the period of Feb, march, April this year has earnt £6040 from self employment

Last year in Feb, march, April his earnings were £5583. Because he had no work in April due to the  covid outbreak 

In previous years, for example, 2019 in that same Feb, march, April period he earnt £10,000. In 2028 in feb, march, April he earnt £11000

So I guess this three month period compared to last, doesn't show a significant reduction in trading profits  from last year. Because last year he earnt less in that period, but only because he had no work in April due to covid. However he has had a significant reduction In Profits compared to previous years.  

Which year or years should we be comparing this to?

I hope my message makes sense. New baby and trying to make sense of this and my head is all over the place!
Thank you x

P.s forgot to say that my husband is self employed but gets paid through the CIS scheme where his tax is taken off before he receives it. This is the after tax figure. 

Jeremy535897

You are comparing the actual or expected results for the three months to 30 April 2021 with what they would have been expected to be if there was no coronavirus. You are not comparing current year with prior year, although in some circumstances that would be a guide. You have already explained why it is not, and that will be the same for many others.

You should be looking at gross figures, not figures after the deduction of tax. If he makes up his accounts to 31 March or 5 April, you have an additional challenge in trying to work out whether the relevant year's trading profits have been significantly reduced, as the 3 month period falls partly in 2020/21 and partly in 2021/22.

stulaunch

All HMRC ask is that they expect you to make an honest assessment about whether you reasonably believe your business will have a significant reduction in profits.
They ask you to decide what a significant reduction is.

If like me, your husband has had less work than he would have expected. Then I would not worry too much and take the grant.

If HMRC wont give any proper guidance on what Significant reduction is, how on earth can they come back to you and accuse you of not making an honest assessment? 

He sounds like he is in a similar position to me. I'm a self employed floorlayer, I will take grant, I've had over 20 days without work in Feb & March. That for me is significant. Who knows what HMRC will think though?

unholyangel

stulaunch said:

All HMRC ask is that they expect you to make an honest assessment about whether you reasonably believe your business will have a significant reduction in profits.
They ask you to decide what a significant reduction is.

If like me, your husband has had less work than he would have expected. Then I would not worry too much and take the grant.

If HMRC wont give any proper guidance on what Significant reduction is, how on earth can they come back to you and accuse you of not making an honest assessment? 

He sounds like he is in a similar position to me. I'm a self employed floorlayer, I will take grant, I've had over 20 days without work in Feb & March. That for me is significant. Who knows what HMRC will think though?

Only a court can give an interpretation of what it means. That's why they can't give proper guidance, it's not within their power.

Even the government (who were responsible for setting the directions) have no power to say what it means once it's enacted.