Self Employed Income Support Scheme – third grant requirements

01 Dec 2020

The Government has published guidance on how trading conditions affect the eligibility of businesses to claim a grant under the third iteration of the Self Employed Income Support Scheme (SEISS). As a reminder the third grant covers the period 1 November to 31 January and the system to apply for the grant is due to open on 30 November. The maximum grant this time round is £7,500 and the calculation will follow the same lines as the previous two grants. Provided the eligibility criteria are met there is no requirement to have claimed the first two grants in order to claim the grant this time round.

Requirements to claim the Self Employed Income Support Scheme

Previously the requirement was that a business must have been adversely affected by the Coronavirus pandemic within a certain defined time period. This time round however the trading requirements are more prescriptive and apply to the period 1 November onwards. In order to claim the grant under this third version of the scheme the business must either:

  • Be currently trading but is impacted by reduced demand due to coronavirus, OR

  • Have been trading but is temporarily unable to do so due to coronavirus

The business must also:

  • Intend to continue to trade

  • Reasonably believe there will be a significant reduction in its trading profits due to reduced demand or its inability to trade

The business must also meet all other eligibility criteria to make a claim. HMRC has made an explicit statement that it expects claimants to make an honest assessment about whether they reasonably believe your business will have a significant reduction in profits. They have also published a series of examples of how these criteria may or may be not – these can be found here:

WR Partners comment

It is clear that HMRC are intent on tightening the requirements in order to claim this next round of the grant. In previous iterations the concept of “adversely affected” was widely drawn and did not necessarily relate directly to financial results. For this version of the scheme there is a clear requirement for there to have been a significant impact of the profitability of the business. There is also an explicit statement that the reduction in profitability must be due to a reduction in demand and not increased costs. If demand remains the same but additional costs are incurred (e.g. purchasing PPE for staff) then the criteria to claim will not be met.

Unhelpfully there is also nothing in the guidance that explains what the rules mean by “significant.” In other contexts HMRC interpret the term “significant” to mean around 20% but there is nothing in the guidance to indicate whether they will apply this benchmark here – instead each business owner is expected to consider whether they “reasonably believe” the reduction in trading profits due to reduced demand will be “significant.”

In any event there is an expectation that records will be maintained to evidence the fact demand is reduced or temporarily unable to trade.

While for many business it will be clear there has been a significant reduction in profits due to reduced demand, we would still strongly recommend business owners read through the examples given by HMRC and ensure they will be able to demonstrate the requirements are met before making their claim as it is evident that HMRC will be focussing significant resources on reviewing claims under all of the Coronavirus support schemes.

Contact us if you would like some support and someone from our friendly team will be happy to get in touch.

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