How to check eligibility, and the turnover test
As highlighted in last month’s In Practice, applications for the fifth Self-employment Income Support Scheme (SEISS) are open for self-employed individuals and members of a partnership and claims must be made by 30 September 2021.
Like the previous four grants, this grant is also subject to income tax and national insurance, and must be reported on the taxpayer’s 2021/22 self-assessment tax return. The grant also counts towards the taxpayer’s annual allowance for pension contribution purposes.
To be eligible for the fifth grant, taxpayers must have:
Taxpayers must also declare that:
Taxpayers will fall into one of two levels of grant based on how much the taxpayer's turnover has reduced:
HMRC will not ask for any turnover figures if a taxpayer started trading in 2019/20 and did not trade in 2016/17 to 2018/19. These taxpayers will receive a grant based on 80% of trading profits.
Unlike the earlier grants, taxpayers are required to calculate turnover and then compare two turnover figures:
Taxpayers should get both figures ready prior to making their claim.
For this turnover figure, the 12-month period must start on any date from 1 April 2020 to 6 April 2020. Turnover will cover one of the periods as below:
So, if taxpayers have a different year end as compared to the above, they will require to apportion two years’ results to arrive at the turnover for 2020/21.
The guidance states that for businesses that started or ceased during the year, the turnover reported will be for less than 12 months.
Taxpayers should include the turnover for all businesses but exclude all other income including Covid-19 support payments, such as previous SEISS grants, Eat Out to Help Out payments and local authority or devolved administration grants.
For most, the second turnover figure required will be the total turnover from all businesses as reported in their 2019/20 tax return.
However, where this was not considered to be a ‘normal year’, taxpayers can use the turnover reported in their 2018/19 return indicating why 2019/20 was not a normal year. HMRC provides examples where the taxpayer:
Different accounting period
Where a taxpayer has an accounting period that is longer or shorter than 12 months, this must be adjusted to a 12-month figure.
If the taxpayer has a 15-month accounting period and declared a turnover of £45,000 on their 2019/20 tax return, to get their 12-month turnover for 2019/20 they could:
However, if this method does not produce a fair result an alternative reasonable method may be used.
Where a taxpayer has a short accounting period recorded in their 2019/20 return, this must be adjusted to 12 months.
Say they had:
The 12-month reference period is calculated by adding four months of the turnover from their 2018/19 tax return (£8,000) to the eight months of turnover from their 2019/20 tax return (£16,000) to give £24,000 as the reference period turnover.
Partners in a partnership must provide turnover figures for the whole partnership. However, where they have other businesses, they must use their share of the partnership turnover.
Once both the above turnover figures are calculated, the two must be compared.
Where the 2020/21 pandemic year turnover is less than the reference period turnover, the fifth SEISS grant is available at either the higher or lower level detailed above.
HMRC has provided examples which can be used as a reference to cross check the eligibility of the grant level.
Members should also bear in mind their obligations under Professional Conduct in Relation to Taxation (PCRT) and anti-money laundering regulations when assisting clients in completing their self-assessment tax returns where they know or have reasonable cause to believe that the clients have claimed SEISS grants.
Members should refer to ACCA’s guidance on PCRT obligations for SEISS grants.