What does ‘adversely affected’ mean?
Businesses must have been ‘adversely affected’ by COVID19. In our eyes, there aren’t many businesses that haven’t!
If you’ve seen a drop in your earnings, and/or a drop in the number of people you can safely get through the doors of your business, then you’ve been impacted!
The HMRC consider an adversely affected business as ‘a business that has temporarily stopped trading, the trading has been scaled back (a drop in customer numbers / sales), or the business has incurred additional costs due to COVID19, i.e. you’ve had to purchased PPE, safety equipment etc.
The HMRC haven’t issued exact guidance, just suggestions as follows;
- The supply chain of the business has been affected
- Fewer or no customers / clients
- Staff were unable to work – either due to lockdown, isolation/shielding or the premises was not big enough to allow for safe social distancing for all employees.
- One or more business contracts have been cancelled
- The business has had to buy protective equipment in order to trade following social distancing rules.
- The business has had additional costs associated with COVID19, including the purchase of screens, signage, PPE and additional cleaning requirements.
- If the owners cannot work due to shielding, self-isolating, on sick leave due to COVID19, or have caring responsibilities due to COVID19.
In all cases, business owners should keep records to support their claim, including why their business has been affected, and for which periods.
As with the first grant, the HMRC will pay the equivalent of 3 months trading profits, based on the trading profits of the tax returns filed for 2016-17, 2017-18, and 2018-19. However the government will only pay 70% of average earnings up to £6,570 (£2,190 per month).
The reason for this is that they expect the majority of businesses that claimed first time round to be back to some form of work.
Who isn’t eligible?
You are not eligible for the SEISS grants if any of the following applies:
- Your trading profits are more than £50,000 – for both tax year 2018/19 and when averaged across the tax years you traded in during the last three full tax years starting in 2016/17.
- You aren’t self-employed or in a partnership at the moment, or don’t intend to be in the future. It’s not enough to merely be enrolled for Self-Assessment and to have undertaken self-employment work or have a role in a partnership at some point in the past year. You must be trading now and intend to do so in the 2020/21 tax year too.
- You failed to submit a Self Assessment tax return for the 2018/19 tax year before 23 April 2020 – the deadline has long since passed, and if you submit now you will get a late filing penalty, and it still won’t count towards your claim.
- You haven’t lost trading profits due to the coronavirus outbreak – during your application, the HMRC will require you to declare that you have been adversely affected, and may attempt to recover amounts paid to taxpayers who falsely declared as such.
- Less than 50% of your income came from your self-employment or partnership for both tax year 2018/19 and when averaged across the tax years you traded in during the last three full tax years starting in 2016/17.
It’s important to remember that these grants are not repayable as they are not a loan, but they are taxable, so you will be taxed on how much you receive on your 2020-21 tax return (due 31st January 2022).
The second grant portal is due to open on the 17th August via the HMRC Portal.
SEISS Claim Portal
Once claimed, you’ll receive your grant within 6 working days, and it will be paid in a lump sum covering the three months, not in monthly instalments.
If you’re unable to claim online, you can contact the HMRC by phone on 0800 0241222 for further guidance.
For details on how to apply, visit our blog here, which will walk you through the process.