Self Employed Income Support Scheme

Self Employed Income Support Scheme first grant review and should I apply for the second grant, these are the two learning points from this blog.

The government announced the self-employed income support scheme (SEISS) back in April and this scheme has been extended. There is the opportunity of a second grant if you are self-employed and been affected by COVID-19 on or after the 14th July 2020.

We have written this blog and included it in our newsletters as we are concerned that a number of business might have claimed the first grant incorrectly and some business might be looking to claim the second grant when they shouldn’t.

More importantly you need to be keeping records of how you were affected. Investigations are going to work on the basis everyone is guilty and you  will need to prove you have been affected if you can’t you will end up repaying the entire grant plus possibly 100% penalties plus risk having your name published on the HMRC website. HMRC will not be messing around as they will be looking to score the Government PR points on how tough they are being with people who “break” the rules. Ignorance has not in the past and will not be a defence.

We have been advised that HMRC will be checking these claims and we suspect that HMRC will be looking at yearly profits next year as a first indication as to whether a business has been “affected” by COVID. We also think the building industry is going to be targeted heavily.

We do not want to discourage any businesses from claiming the self-employed grants, but we do want to educate all our clients and the wider community on whether they are eligible which is not always black and white.

If you are not sure whether you should claim please contact Phil at the office and he will be able to guide you to a decision and more importantly help you document the decision in case of enquiry.


Self Employed Income Support Scheme notes

SEISS has been extended. If you are eligible and can confirm to HMRC that your business has been adversely affected on or after 14 July 2020, you will be able to make a claim for a second and final grant from 17 August 2020.

You can make a claim for the second and final grant if you are eligible even if you did not make a claim for the first grant.

Should I claim the grant, and should I have claimed the first grant?

You can claim the grant if you have been adversely affected, but what does that mean?

I have copied some examples of HMRC version of Affected into the blog but there is a link to all their examples below. HMRC examples nearly always come back to working time and income, so if we have lost working time and hence income, we need to be recording evidence of this.

HMRC’s examples all start and finish with the building trade so I think we have a good idea of the industry they are going to investigate first and where they suspect fraud.

Examples of HMRC of adversely affected

We are encouraging all claimants to review their first claim to see if they can demonstrate that they have been affected.


Scenario 1

A builder worked on a very small building site and was still able to go to work throughout the pandemic as she was able to work within the social distancing rules.

Adversely affected Is the condition met?
First grant No
Second grant No

Reason: As the builder’s trade was not adversely affected by coronavirus she is not eligible to claim either grant.


Scenario 2

A builder worked on short-term contracts on different building sites. She only had half the work she would normally have in April 2020 and May 2020 because some of the building sites were closed. She was able to work as normal from June 2020 because the building sites reopened.

Adversely affected Is the condition met?
First grant Yes
Second grant No

Reason: As the builder’s business was adversely affected by coronavirus before 14 July 2020 she was eligible to claim the first grant. However, her business was not adversely affected by coronavirus on or after 14 July 2020 so she is not eligible to claim the second grant.


Scenario 3

A shop owner closed his shop from March 2020 to 14 June 2020. He reopened his shop on 15 June 2020, but the number of customers he could serve was lower because of the social distancing rules. He also had increased costs due to buying protective equipment.

Adversely affected Is the condition met?
First grant Yes
Second grant Yes

Reason: As the shop was closed his business was adversely affected by coronavirus before 14 July 2020 and he was eligible to claim the first grant. His business was also adversely affected on or after 14 July 2020 because the number of customers were significantly lower and increased costs for protective equipment he is also eligible to claim the second grant.


What records should I be keeping if I want to claim?

So, you have decided you have been adversely affected, what records should you be keeping on both claims.

  • Business Accounts showing a reduction in turnover, we will be able to keep these. If you do not know your monthly income, we can set up a full bookkeeping system to provide monthly information. Otherwise you might not know until you give your records to your accountant.
  • Schedule of hours normally worked Pre Covid and each month of this financial year to demonstrate less working time.
  • Date of closures of business because of COVID
  • Copies of quotes that were accepted and then e-mail or records of when these jobs were cancelled. Not just postponed but cancelled.
  • Dates you could not get materials for work due to supply chain interruptions and also evidence of this, emails are great evidence.

If you require any specific advice to your situation, please contact Phil and he will be happy to help.

Just a reminder if you have opted out of our fee protection insurance, we would suggest now is the time to opt back in if you are concerned about tax investigations. This service will cover all our fees in the event of an enquiry. Tax enquiries are one of the only elements excluded from our fixed fee billing.

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