COVID-19: Important changes to SEISS eligibility criteria and Local Restrictions Support Grants

The guidance for the third self-employment grant which can be claimed from Monday 30 November has been published and it’s important for business owners to understand that the eligibility criteria has been further tightened so claimants need to consider the new rules carefully before claiming.

Previous policy announcements indicated that to qualify for the third grant, a business needs to not only be adversely affected due to COVID-19 but also to:

• be currently trading but be impacted by reduced demand due to coronavirus; or
• have been trading but be temporarily unable to do so due to coronavirus.

The latest guidance includes an additional test which is that the taxpayer must:

• intend to continue to trade; and
• reasonably believe there will be a significant reduction in their trading profits due to reduced activity, capacity or demand or inability to trade due to coronavirus.

We understand that the significant reduction in trading profits test is to be applied to the accounting period as a whole which means that claimants will potentially need to forecast their financial results in order to establish their eligibility for this third grant.

HMRC’s guidance also indicates that it expects claimants to make ‘an honest assessment’ about whether they reasonably believe that their business will have a significant reduction in profits.

Click here for guidance on how HMRC works out trading profits and non-trading income for the SEISS.

Chris Bowles, a director at Old Mill’s Wells office comments ‘Whilst it can be difficult for hard-pressed owner-managers to keep abreast of the constant changes coming out of the Treasury, this tightening of the criteria is really important. Essentially, HMRC have introduced a test where a taxpayer needs to be comfortable that their profits in the year they’re claiming for will be significantly reduced from prior years.

‘Hence it’s ever more important for business owners to have systems in place which give them accurate and timely accounting information to enable them to make the necessary assessment.’

Jolyon Stonehouse, Head of Owner Managed Businesses adds ‘This is becoming potentially a bit of a minefield and we strongly urge that claimants have a conversation with their adviser if they are in any doubt about the new rules as we can foresee that some taxpayers may inadvertently miss the fact that the new criteria is significantly different from those that applied to the earlier grants.’

With clarification that most of the UK is now in the two toughest levels of tier restrictions when the national lockdown ends on 2 December, business owners can assess whether additional grants are available to them based upon whether they are legally forced to remain closed (e.g. Tier 3 firms in Bristol) or whether they are not legally being forced to close but have been severely impacted due to temporary local restrictions.

Click here to check if your business is eligible for a coronavirus grant due to National Restrictions (for closed businesses)

Click here to check if your business is eligible for the Local Restrictions Support Grant (for open businesses)

Click here to check if your business is eligible for the Local Restrictions Support Grant (for closed businesses)

Click here to check if your business is eligible for the Additional Restrictions Grant (ARG)

NB ARG supports businesses that are not covered by other grant schemes or where additional funding is needed. ARG essentially provides local councils with grant funding to support closed businesses that do not directly pay business rates as well as businesses that don’t have to close but which are impacted.

These additional coronavirus support grants are available from and administered by local councils across the region and some portals are open for applications whilst others have yet to open:

• Click here for Somerset West and Taunton
• Click here for Mendip
• Click here for South Somerset
• Click here for Sedgemoor – The application window for the ARG closes at on December 7
• Click here for Devon County Council
• Click here for Exeter City Council
• Click here for Cornwall Council
• Click here for Dorset Council
• Click here for Wiltshire Council

To find your local council click here and insert your postcode.

For further information please contact your usual Old Mill adviser or click here…