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Last month, the second and final round of the Self-Employment Income Support Scheme went live. Millions of self-employed people across the UK put in a claim for 70% of their trading profits over three months, up to a maximum of £6,570. However, concerns about the SEISS eligibility rules have led many people to wonder whether the taxman will challenge their claim at a later date – and claw back the cash.

What are the SEISS eligibility rules?

To be eligible for the SEISS grant, your business must have been ‘adversely’ affected by coronavirus. To apply for the second grant, this must have been true on or after 14 July.

But what does ‘adversely affected’ actually mean? As always, the devil is in the detail.

Firstly, if you have been unable to work for the following reasons, your business is likely to have been adversely affected.

  • You’ve been shielding
  • You’ve been self-isolating
  • You’ve been on sick leave because of COVID-19
  • You’ve had caring responsibilities because of coronavirus.

Secondly, your business may be deemed to have been adversely affected if you’ve had to ‘scale down, temporarily stop trading or incurred additional costs’ because:

  • Your supply chain has been interrupted
  • You have fewer or no customers or clients
  • Your staff have been unable to work
  • One or more contracts have been cancelled
  • You’ve had to invest in PPE to follow social distancing rules.

Record keeping

As you can see, SEISS eligibility boils down to two key situations – either your income has dropped or your costs have risen (or both). Either way, you need to keep records so that you have evidence your business was adversely affected. HMRC’s guidance gives the following examples:

  • business accounts showing a reduction in turnover or increase in expenditure
  • confirmation of any coronavirus-related business loans you have received
  • dates your business had to close due to lockdown restrictions
  • dates you or your staff were unable to work due to coronavirus symptoms, shielding or caring responsibilities.

How will HMRC enforce the rules?

The second round of the SEISS scheme is open for applications until 19 October. If HMRC believes you could be eligible, it will have invited you to apply. From that point, the onus is on you to claim only if your business has been ‘adversely affected’ on the relevant date.

So, in theory, if your business had fewer customers on 14 July, but had subsequently recovered by August, your claim should still be valid. On the other hand, if you were shielding on that date but you could work from home and your income wasn’t affected, then your claim is less likely to be valid.

Any attempt to claw back grants will depend on how HMRC applies the rules. At the moment, that is not yet clear. If you have already claimed, we strongly advise you keep records of how your business was adversely affected in case the taxman comes knocking at a later date. If you haven’t yet made the second claim, make absolutely sure your SEISS eligibility is watertight. Talk to your account manager at THP if you have any doubts!

Avatar for Kirsty Demeza
About Kirsty Demeza

With a portfolio that ranges from startups to companies with a £10 million turnover, Kirsty’s talent for working closely with her clients ensures her services remain in strong demand.

“The most rewarding part of my role is seeing clients succeed,” she says. “When you help a new business and watch it expand into new premises and secure big contracts, it’s a great feeling.” Kirsty never finds two days are the same.

As well as providing accounting services that range from self-assessment tax planning and VAT to audit and accounts, she’s part of THP’s sales team and closely involved in helping our trainees to develop their skills.

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