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Update: SEISS and furlough scheme changes

2nd June, 2021

Ongoing changes to the Coronavirus Job Retention Scheme (‘furlough’ scheme) and Self-employment Income Support Scheme (SEISS) creates the potential for inadvertent errors. In this article, Nottingham chartered accountants, Clayton & Brewill, outlines the recent changes, and explains why it is important claims can stand up to HMRC scrutiny.

SEISS grants

There are two further self employment income support scheme (SEISS) grants; SEISS 4 and 5. They are intended as a final, more restricted phase of support. For SEISS 4, businesses must declare a reasonable belief that there will be a significant reduction in trading profits due to reduced business activity, capacity, or demand because of COVID-19.

The impact on the business must relate to the period 1 February 2021 to 30 April 2021. The reduction in profits must be reflected in the figures reported on the relevant tax return. It is vital that you keep any evidence that supports claims. This can include:

  • business accounts showing reduction in activity compared to previous years
  • records of reduced or cancelled contracts or appointments
  • a record of dates where you had reduced demand or capacity due to government restrictions

SEISS 5 introduces an additional turnover test; the amount of grant will hinge on how much turnover has fallen between April 2020 and April 2021.

SEISS eligibility

To be eligible for SEISS 4 or 5, the 2019/20 tax return must have been submitted before midnight on 2 March 2021. HMRC will base calculations on 2019/20 tax return data and more recent years than for earlier SEISS grants.

This could potentially produce unexpected results; it opens the door to some new claimants, such as those starting self-employment in the 2019/20 tax year, provided they meet other eligibility conditions. On the other hand, someone eligible for earlier SEISS grants may receive more or less than before.

Support with claims

Your tax adviser or accountant cannot make a claim on your behalf. We can, however, support you by helping you get ready to claim, using the eligibility checker on your behalf or by supporting you to use it yourself; so please do get in touch with the Clayton and Brewill team if you have any concerns.

We can also help you through the rest of the process and suggest other forms of support you may be eligible for in addition to, or instead of, SEISS.

Furlough scheme update

The furlough scheme runs to 30 September 2021. There is no change until 1 July 2021, when government contributions drop. Employers then make 10% contributions in July, and 20% in August and September.

For periods starting on or after 1 May 2021, claims can be made for employees employed on 2 March 2021. This is providing a PAYE RTI submission has been made to HMRC between 20 March 2020 and 2 March 2021, which notifies payment of earnings for that employee.

It’s not necessary to have claimed under the scheme for an employee before 2 March 2021 to claim on/after 1 May 2021.

Tackling fraudulent claims

HMRC has stressed that it is not looking for innocent errors. But with details of employer furlough claims now published, new SEISS recovery powers, and a new Taxpayer Protection Taskforce set up to tackle fraud, it is important that any claim is well-evidenced and can stand HMRC scrutiny.

As always, the Clayton & Brewill team is happy to help you review compliance, and we can provide further advice on the coronavirus business support measures available to you. Please call us on 0115 950 3044 or send an enquiry here.

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