Adversely affected?

In a recent article that I wrote for Informanagement Ltd, I discussed recent guidance issued by HMRC that aimed to clarify if claimants of the Self Employed Income Support Scheme grants passed the “Adversely Affected” test. My post is reproduced in full below:

A troublesome aspect of the SEISS scheme is that claimants need to confirm that they have been adversely affected by the coronavirus outbreak in order to make a valid claim.

Will this condition come back to haunt us?

Guidance has been published on the GOV.UK website on this very subject. A summary of pertinent comments included in the guidance are reproduced below:

  1. Adversely affected is typically when your business has experienced lower income or higher costs due to coronavirus.
  2. HMRC expects you to make an honest assessment about whether your business has been adversely affected. There is no minimum threshold over which your business’ income or costs need to have changed.
  3. Keep recordsof how and when your business has been adversely affected.

The guidance then lists a number of factors that may provide evidence that a claim was justified:

  • You are unable to work because you:
    • are shielding
    • are self-isolating
    • are on sick leave because of coronavirus
    • have caring responsibilities because of coronavirus
  • You have had to scale down, temporarily stop trading or incurred additional costs because:
    • your supply chain has been interrupted
    • you have fewer or no customers or clients
    • your staff are unable to come in to work
    • one or more of your contracts have been cancelled
    • you had to buy protective equipment so you could trade following social distancing rules

And then the guidance states that If your business recovers after you have claimed, your eligibility will not be affected.

It is not clear if the same issues will apply to the CJRS as the guidance published refers specifically to SEISS.

It will be interesting to see how HMRC will enforce eligibility for these major grants in the coming months. One thing is clear, when accounts are submitted for 2020-21, this will provide basic evidence of how income and expenses have fared compared to the previous year.

Wonder if HMRC will put two and two together?

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Bob Edwards

Bob has been working with practices across the UK offering novel ways to improve cross-sales and increase new client acquisitions. He is also interested in "step changes" in legislation that offer challenges, and therefore opportunities, for practitioners to provide new recurring and one-off support services to clients.

3 thoughts on “Adversely affected?”

  1. Hi Bob

    One question I have for you is the tax treatment for various Clubs and Associations receiving various Grants from the Local Authorities for £10k and £25k. Will these will be subject to Corporation Tax as non Members Income. If the Clubs are not preparing CT600 Returns due to their size will they have to volunteer this tax?

    I look forward to hearing your views on this matter.

    I am the Treasurer of the local Golf Club.

    Kind regards

    Andrew

    Reply
  2. You have made an interesting point re the 20/21 accounts. However, we are providing assistance to a number of clients on a little or no fee basis. While being additional work, it will neither show as an additional cost nor lower income, ( our recurring fees and staffing levels are unaffected ) but non the less, it could be said we have been adversely affected in not recovering that time.

    Reply

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