Self-employed business owners and sole traders shouldn’t rush to apply for the second round of SEISS Government coronavirus relief funding unless they are confident they qualify. That’s the view of our expert team here at Swindon accountants Optimum.
Thousands of self-employed people have already benefitted from the first tranche of the self-employed income support scheme (SEISS). The second round of funding opens for applications from August 17, but is aimed only at those who have been adversely affected by Coronavirus since July 14.
If there is an overpayment, then HMRC has to be notified of this within 90 days of the claim being submitted. Failing to do so could incur penalties of between 30% and 100% of the overclaimed amount.
A similar penalty regime is in place for overpayment to employers of the Government’s Coronavirus job retention scheme, or CJRS, known as the furlough scheme.
“With the SEISS, HMRC carries out its own assessment and if an individual meets certain criteria they are invited to apply,” says Mandy Gibson, Tax Supervisor at Swindon-based Optimum. “These criteria are that the business has to have been adversely affected by the pandemic, that the individual traded in 2019/20 and that they intend to continue to trade in 2020/21.
“With the first round of SEISS claims, HMRC had self-assessment returns to base its information on. This second round depends on current trading, only applying to businesses adversely affected on or after July 14.
“This second round is also more complicated because the onus is very much on the individual to ensure they meet the criteria. If they don’t, and they overclaim and fail to notify HMRC of this, then penalties will be incurred.”
HMRC has issued guidance on what it means by ‘adversely affected’. This includes the business having stopped trading temporarily, or being scaled back, or having incurred extra costs. Examples include have fewer or no customers, the supply chain being interrupted, or contracts being cancelled.
Mandy adds it is important to remember SEISS payments count as income, and are liable to tax.
“The rules around SEISS and other support are not as straightforward as they might appear. Throughout lockdown and as we emerge from the restrictions, we have been working closely with clients, including SMEs, business owners and the self-employed, to ensure they understand what they can claim and also to help ensure their businesses are in the best position as we move forward.”
To talk to our Swindon accountancy team about the second round of SEISS, or any of the other Government financial support schemes created in response to COVID-19, please get in touch.