Self Employment Income Support Scheme

Second round claim system now open

The online system to allow the self-employed to claim under the second round of Self Employment Income Support Scheme (SEISS) opened this morning (17 August). The second round of the scheme is broadly the same as the first round which closed for applications on 13 July. There are however certain key differences as detailed below.

Eligibility and amount of the grant

The grant is now calculated at 70% of average monthly trading profits for three months, capped at £6,570. This is a reduction from the 80% grant/£7,500 maximum under the previous iteration of the scheme. The method of determining eligibility and calculating average trading profits remain the same as the previous version, which means those with high levels of non-trading income or those only recently self-employed remain unable to claim.

“Adversely affected by Covid 19”

As with the previous system, when making a claim the self-employed person will be required to make a statement confirming their business has been adversely affected by the Coronavirus pandemic. Under this system however the requirement is to state the business has been adversely affected by Coronavirus on or after 14 July 2020. HMRC have published examples of how businesses may meet this test and what records should be retained to demonstrate this if challenged. The guidance can be found here.

Note there is no link between the extent to which the business has been adversely affected and the amount of the grant. It is however important, before making a claim, to ensure that this criterion is met and that it will be possible to demonstrate this in the future. Financial penalties may be imposed by HMRC if a self-employed person is not able to demonstrate their business was adversely affected in the event of a subsequent enquiry into the claim.

Time limit for making the claim

Claims under this second iteration of the scheme must be made by 19 October 2020. Unlike the first iteration of the system it does not appear that HMRC are seeking to stagger access to the system by issuing taxpayers with specific dates on which their access to the system opens so the system should be available to all now.

WR Partners comment

The opening of this second phase of the system is clearly welcome news although it is disappointing that the eligibility criteria remain unchanged therefore excluding large numbers of the self-employed whose businesses have suffered significant impacts as a result of the pandemic.

At the same time it should not be assumed that simply because a grant was available under the first iteration of the system that a claim under the second round is automatic. Every claimant still needs to consider whether their business has been adversely affected by the pandemic on or after 14 July 2020. If a business was adversely affected prior to that date but has returned to pre-Covid trading levels by 14 July then the examples given in HMRC’s guidance need to be considered very carefully before making a claim.

HMRC’s guidance does make it clear that a business recovery after 14 July does not in itself mean a claim cannot be made as long as there were adverse impacts on or after that date. However it may well be imagined that a tax return showing business results for the current tax year as stronger than in previous years AND including amounts claimed under SEISS for the post 14 July period may well attract some attention from HMRC. It is here where the ability to demonstrate the adverse impacts by keeping appropriate records is vital.

Paul Brown | Tax Partner