Self-Employed Income Support Scheme (SEISS)

Claims for the self-employed income support scheme (SEISS) need to be submitted by the taxpayer themselves, as there is no facility for tax agents to claim on behalf of their clients. As a result, some traders may have overlooked the conditions for the scheme which include the requirement to:

• have carried on a trade in the tax years 2018/19 and 2019/20; and
• intend to continue to carry on a trade in the tax year 2020/21.

As HMRC will have only received the 2018/19 tax return at the time of the SEISS grant applications, it may not know whether the trader continued to trade beyond 5 April 2019 or not. Where the business is VAT registered and has continued to submit VAT returns to date, HMRC will have a good idea that the business is still trading.

Where HMRC suspects that the business has ceased trading, it will have dispatched an email to the business owner asking for confirmation that the business has not permanently closed.

If this applies to you, you need to look out for this email as you will need to respond to HMRC online by 20 November or within 90 days of receiving the SEISS grant. You will need to sign into the Government Gateway you used to make the SEISS claim and complete a form. We cannot do this on behalf of our clients.

A business may have closed temporarily during the coronavirus pandemic, but the owner has every intention of reopening, in which case the owner remains eligible for the SEISS grant and the future SEISS grants. If not, one or both of the SEISS grants already claimed may need to be repaid.

The intention to trade condition is difficult to pin down, but if on the day the trader applies for the SEISS grant (s)he genuinely intends to recommence trading, the intention condition is met.

Where trader has stopped trading

Treasury Direction for SEISS rules

Daily penalties for late returns

One of the other conditions to qualify for a SEISS grant is that the individual must have submitted a tax return for 2018/19 reporting self-employed income. If this return was not received by midnight on 23 April 2020 no SEISS claim was possible.

This may have spurred many taxpayers to submit their 2018/19 SA returns without further delay. However not all SA tax returns include self-employed profits, and there may still be a large number of 2018/19 returns outstanding which are accruing penalties.

The £100 penalty for being one day late with a tax return is well known, but there are also penalties of £10 per day for each day the return is more than three months late, capped at £900.

For the 2018/19 SA return these daily penalties would have accrued from 1 May to 30 July 2020, in the middle of the pandemic. HMRC has decided not to collect the daily penalties for late 2018/19 tax returns in recognition of the difficulty many people had in completing tax returns in that period. Also, to impose the daily penalties HMRC need to give notice to the taxpayer, which in many cases will not have happened.

The further penalties due for tax returns which are over six months late, or 12 months late, will still apply.

Penalties to be waived

This information is taken from the weekly Tax Tips, published by the Tax Advice Network, for which you can subscribe at www.TaxAdviceNetwork.co.uk