SEISS grant 4 no profit in 2020-2021, but expenses incurred. Am I eligible re. ‘Must have traded’

SGGLOVER

Hi, 

One of the eligibility requirements is ‘Must have traded in both tax years 2019-20 and 2020-21’.

Due to various set backs in my Childminding business (including of course Covid restrictions) I received no money from my business clients in 2020-21 (barring Grant money), but did incur expenses (advertising/consumables) and took some professional courses and had the intention to continue the business (and still do!).

My key question is what is the definition of the phrase ‘must have traded’? Is it solely based on turning a profit?

I have sent my tax return for 2020/21 with the lack of profit included and have since received a letter from HMRC with my date for claiming Grant 4, for what that is worth, as I’m not sure the tax return would have been included in their eligibility decision - I’m sure not everyone has posted their 2020/21 tax return yet so why would they include any information from it in their decision.

I have put a couple of hours research into the definition of trading and have found nothing concrete, here or on the web. If the question is answered elsewhere on this forum please let me know. 

Thanks for any help you guys can give! Further clarification can be provided.

S.

Jeremy535897

You do not have to make a profit to be trading, otherwise there would never be any relief for losses. Having no turnover at all in a whole tax year is more difficult, though. Why were you unable to get any work at all?

SGGLOVER

During that year there was a period of maternity leave, then when I was ready to resume trade, I had appendicitis and had my appendix removed which turned out to have a cancerous tumour. Then had to get major bowel surgery followed by chemotherapy. I was ready again to return to work when I received guidance to self isolate due to being CEV due to the ongoing chemotherapy. The guidance to self isolate only ended on 12th April. So it has been a mixture of covid restrictions and periods of convalescence which has led to zero turnover. 

Jeremy535897

My commiserations. Is this relevant?
https://www.litrg.org.uk/tax-guides/coronavirus-guidance/self-employment-support-scheme-parental-extension-who-does-it-help

SGGLOVER

Thank you I’m hopefully on the mend, with good results so far!

I think I will claim anyway. I wouldn’t want to miss out on the grant, because of ambiguity over HMRC criteria for trading (at least in my case). If I’m wrong I will obviously have to repay the grant, but I’d rather that than miss out, especially in such uncertain times. 

Jeremy535897

Having looked at a webinar by the Chartered Institute of Tax, they say that HMRC will treat you as having ceased to trade if you take active steps to close your business (like giving up a lease for example), or report a cessation to HMRC, rather than just having no income.

SGGLOVER

Thank you again Jeremy, for taking the time, that is very helpful information!

justwhat

SGGLOVER said:

During that year there was a period of maternity leave, then when I was ready to resume trade, I had appendicitis and had my appendix removed which turned out to have a cancerous tumour. Then had to get major bowel surgery followed by chemotherapy. I was ready again to return to work when I received guidance to self isolate due to being CEV due to the ongoing chemotherapy. The guidance to self isolate only ended on 12th April. So it has been a mixture of covid restrictions and periods of convalescence which has led to zero turnover. 

You had a hard year by the sound of it, i hope things pick up for you in the future. Good Luck

justwhat

You only have to attempt to trade, profit and turn over is irrelevant. Sickness / maternity would not necessarily cause you to cease being SE.  

Really you just have to prove intention to continue trading as SE.  

SGGLOVER

Thanks for your kind words and response, all very useful!

TBagpuss

I think that as you didn't close your business you would be classed as continuing to trade - you had a business before and after, and if you were incurring expenses that is fairly strong evidence that you were intending at all times to continue trading and were keeping the business profile alive,
Hope you continue to make a good recovery.