Good day.

If you haven’t melted over the weekend, given yourself food poisoning from the barbecue or overdone it with the strawberry daiquiri’s (guilty) you may find some of the information below useful. It may not all be relevant to you but take from it what you need. If you would like to talk any of this through or understand how any of the content may affect you, please drop me an email and I’ll get back to you. (info@togetherwecount.co.uk)

SEISS Second Grant Claims

The second round of Self-Employed Income Support Scheme Claims will begin on 17th August. If you are self-employed, I have included the information for round two of the scheme below.

Redundancy and Furlough

 Please see below for a more in-depth description of all the items mentioned.

 Loan Charge Voluntary Restitution

HMRC have now released guidance notes on how they intend to refund those eligible who have already reached a settlement with HMRC on the grounds of the Loan Charge legislation and paid over the tax and national insurance. The guidance also covers the situation where those eligible are in the process of settling with HMRC and how the waiver of all or part of that settlement will come about.

 

Self Employed Income Support Scheme (SEISS) extension

General Notes

  • The individual can make the second claim even if they did not make the first one. This might have been due to being out of time in which to make a claim or it may be their business was not ‘adversely affected’ by Covid-19 covering the period March, April and May, but was post that date.
  • The claim portal will be open on 17th August to make a claim. And will close on 19th October 2020. The claims are likely to be staggered.
  • The claim will be based upon 70% not 80% up to £6570 calculated on a 3 month period.
  • The grant is taxable and should be reflected in the accounting period the grant is received.
  • The criteria for the second claim is the same as the first one.
  • The individual will have to confirm that their business has been ‘adversely affected’ by Covid-19.
  • The individual has to make the claim rather than Together We Count.

Adversely Affected examples

HMRC have provided a wider set of examples of what might constitute a business being ‘adversely affected’.

  1. A)The business owner is unable to work because they are:
  • Shielding.
  • Self-isolating.
  • On sick leave because of the Coronavirus or having caring responsibilities because of it.
  1. B)The business has had to scale down or temporarily stop trading because:
  • The supply chain has been interrupted.
  • There are fewer or no customers or clients.
  • The staff are unable to work.

The list is not an exhaustive one. Another example might be the additional costs incurred to enable the business to comply with the physical distancing rules.

SEISS Criteria

The present eligibility criteria is as follows:

  1. a)With the exception of those self-employed who are caught by the loan charge issue or who were impacted due to parental leave or military reservists (in some cases).
  2. b)‘Trading profits’ must be no more than £50,000 and equal to, or more than, half of the individual’s ‘total income’ for either:
  3. i)The 2018/19 tax year
  4. ii)The average of the tax years 2016/17, 2017/18 and 2018/19.
  5. iii)           If the business did not trade in the 2016/17 tax year, the average of the tax years 2017/18 and 2018/19.
  1. c)The business must have been trading pre 2019/20 tax year.
  2. d)The business must be continuing to trade or would be but for the coronavirus.
  3. e)The business must be intending to trade in the 2020/21 tax year.

The application process

  1. During the application process the individual should be presented with a calculation of the grant amount.
  2. There is no option to claim a reduced or increased amount.
  3. If the individual disagrees with the amount shown there will be a ‘review’ link to request that HMRC should review the figure to see if it should be higher or lower.
  4. The SIESS helpline number will be 0800 024 1222. This can be used for SEISS queries or with issues of not being able to make the claim through the Gateway portal. You will not be surprised to hear that you can expect delays when calling this number.
  5. There is also an online webchat available as well to try to assist individuals with their queries and the application process. Again, expect delays.

Self-employed parental leave

The Government has announced that self-employed parents, whose trading profits dipped in the 2018/19 tax year, because they took time out to have children and, who may not have been able to claim under SEISS because of that, may be able to do so.

  • This relates to mothers or father, including those who have adopted, who took time out from trading to care for their children within 12 months of their birth (including stillbirth after more than 24 weeks of pregnancy) or within 12 months of an adoption.
  • The child is born on or before 5th October 2020.
  • The client must have been self-employed in 2017/18 tax year and submitted that year’s Return.
  • They will now be able to check their eligibility based on either the 2017/18 tax year or the average of the tax years 2016/17 and 2017/18.
  • Evidence will be required to support this claim in this situation when registering under these circumstances (see the link below)

https://www.gov.uk/guidance/ask-hmrc-to-verify-you-had-a-new-child-which-affected-your-eligibility-for-the-self-employment-income-support-scheme

  • This also assumes they meet the rest of the SEISS criteria stated above.

Military Reservist (MR)

 The Government has announced that military reservists who are self-employed and whose trading profits dipped in the 2018/19 tax year due to carrying out specified reservist activities during the 2018/19 tax year may be able to claim under SEISS.

  • MR must have carried out at least 90 days of specified reservist activities during the trading period taxable in the 2018/19 tax year.
  • Specified activities are either full time service or additional duties commitments or call out.
  • They will now be able to check their eligibility based on either the 2017/18 tax year or the average of the tax years 2016/17 and 2017/18.
  • The MR income will be ignored for the eligibility test.
  • An MR might still be eligible if they commenced self-employment during the 2018/19 tax year assuming the Tax Return had been submitted by 23rd April 2020. 
  • This also assumes they meet the rest of the SEISS criteria stated above.

Redundancy and Furlough

 I have had a couple of enquiries last week asking if they can claim anything through the furlough scheme regarding any employees they are making redundant.

  • The employer can continue to claim for a furloughed employee who is serving a statutory notice period.
  • Grant payments cannot be used to substitute redundancy payments.
  • As a footnote, there is new legislation which has been brought in on 30th July 2020, which states that employees redundancy pay has to be based upon their normal wage and not the reduced furlough rate.

The Loan Charge Voluntary Restitution

Who is potentially eligible?

  • Did you use a disguised remuneration scheme between 6th April 1999 and 5th April 2016 from which loans were made?
  • Were the loans taken out before 9th December 2010 and no HMRC enquiry has been raised in time?
  • Were the loans taken out between 9th December 2010 and 5th April 2016 and full disclosure was made and HMRC failed to take action?
  •  Did you voluntarily settle the tax with HMRC between 16th March 2016 and 11th March 2020 due to the loan charge legislation?
  • Are you in the process of voluntarily settling the tax with HMRC due to the loan charge legislation?
  • If all the above is correct, you may be due a refund of tax and national insurance or a waiver of the amount still due to be settled.

What is the application process?

  •  HMRC should write to all those eligible by 1st October 2020.
  •  If you don’t hear by then and believe you are eligible you should either phone HMRC on 03000 534226 or email ca.loancharge@hmrc.gov.uk. (get in touch with Together We Count)
  • You will be asked to complete an application form, an example of which can be found on the link below:

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/902945/Apply_for_a_disguised_remuneration_refund_-_Example_form.pdf

  •  The form has to be sent back by 30th September 2021 at the latest.
  •  HMRC will consider the application and send a repayment decision.
  •  You have 2 months to either accept the decision of ask for a HMRC review.
  •  HMRC will send a reviewed decision.
  •  You have 2 months to accept the reviewed decision.
  •  If not accepted, within that timeframe, the application is terminated. 
  •  You can, though, write to HMRC to point out their ‘mistake’.
  •  If HMRC stand by their decision the only other option is to go down the complaints procedure route.

When will no refunds be due?

  • If no loans were made from the Scheme.
  • If no loans were outstanding at the date settlement was reached with HMRC.
  • No inheritance tax refunds will be made.
  • If full disclosure was not made as regards the loans made between 9th December 2010 and 5th April 2016.
  • If HMRC have opened up an enquiry into the original planning in a timely manner.

Any refund or waiver adjustments to be made?

  • Corporation tax relief or income tax relief claimed re the loan payment.
  • Any additional tax or NI charged regarding secondary tax planning arrangements recovered at the time of the settlement.
  • Transitional relief for settlements reached by 5th April 2017 against investments made through a disguised remuneration scheme.

Who can apply for the repayment or waiver?

  • The signatory or signatories who signed the settlement agreement.
  • If deceased, their personal representatives.
  • If lacking mental capacity, their deputy.
  • If the company was a signatory and has subsequently been struck off, it would need to be reinstated.

 I wish you all a productive week. I hope you are all settling into your ‘new normal’ and you have found ways of continuing to run your business as best you can. Please get in touch if you have any questions or require any further information or support.

Kind Regards

Aaron McLeish


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