With under two weeks to the deadline for applications for the government’s self-employment income support scheme (SEISS) grant, the Low Incomes Tax Reform Group (LITRG) is encouraging self-employed people impacted by Covid-19 to double-check their eligibility
HMRC used its IT systems to identify potential SEISS claimants in May 2020 and contacted them to explain about the first round of the grant. But LITRG is worried that there may be some people who did not receive this correspondence, for example because they did not tell HMRC about a change of address.
LITRG is also concerned that some people may have thought they were ineligible for the grant because, when the scheme opened, their business had not been ‘adversely affected’ as a result of Covid-19, which is a requirement for submitting a claim.
The group also highlighted the confusion about the time periods for the SEISS grants. The government initially said that the scheme would ‘cover the three months to May’, which many took to mean that a self-employed business or partnership had to be affected adversely during the three-month period of March, April and May to claim the first grant.
Those affected in June, July and August assumed they would qualify for the second grant.
HMRC subsequently amended the guidance to state that if a business has been adversely affected because of Covid-19 at any point up to 13 July, they will qualify for the first SEISS grant (assuming all other conditions are met).
Only if a business is adversely affected by Covid-19 from 14 July can they claim a second grant.
Businesses which have seen a downturn in trade more recently (for example a sole trader having to take sick leave because of Covid-19) might have thought they were ineligible for the first SEISS grant when the claim process opened in May. LITRG is concerned that those in this position may not have subsequently realised they are eligible for the grant.
Victoria Todd, LITRG head, said: ‘HMRC have announced some important changes to the first SEISS grant and potential claimants need to be aware of these or otherwise risk missing out on important government support. We are urging anyone who has not claimed the first SEISS grant, either because they thought they were not eligible or because they think they are eligible for the second grant instead, to check their eligibility carefully.
‘The opportunity to claim the first grant will be lost after 13 July.
‘This is clearly a difficult time for many small businesses, and we recommend that HMRC publicise widely the first SEISS claim closing date and clarify the general misunderstanding about the claim periods to which the SEISS grants relate.’
RSM has also drawn attention to what it calls the ‘inherently unfair and confusing rules’ for the SEISS scheme.
The firm points out the 13 July deadline for claiming the first grant is different to the deadline for employers claiming under the Coronavirus Job Retention Scheme, which is 31 July. This could be confusing, especially if self-employed individuals are also making claims for their furloughed staff.
it also highlights the income ‘cliff edge’ limit of £50,000, and the requirement that the self-employed income of the individual should be more, or at least equal to, other income.
RMS stated: ‘In other words, if someone has undertaken extra self-employed income to top up their low-paid job, or is starting a new venture alongside their employment, they will not be eligible for help under the SEISS if their employment and other income are more than the trading income.
‘Even if their job entitles them to furloughed payments at 80% of their earnings, their total income in this period could be hugely reduced because they will not be able to claim any grant for their loss of self-employed income.’
In addition, individuals have to make their own claim, rather than through an agent or accountant. This means they will need to be IT literate, have online access and have a government gateway account, which are all potential sources of delays in making claims, increasing the risk of missing out.
RSM said: ‘It is recognised that the government coronavirus support measures have been generous. However, it seems unfair to penalise those who, arguably, take the greatest risks through entrepreneurialism and self-employment. There needs to be an urgent review of these issues before the first claim period deadline arrives.’