Self-Employed HMRC update

[Snorkelface]

HMRC has added a few updates for the self employed grant scheme.

www.gov.uk/guidance/claim-a-grant-through-the-coronavirus-covid-19-self-employment-income-support-scheme

While HMRC will be contacting eligible claimants directly over the next couple of weeks with more specific details you can now see if you're eligible to claim and what date you'll be able to lodge your claim by using their on-line tool (about half way down their web page).

You'll need your UTR and NI number to do this and it will also give you the opportunity to set up your Gateway account if you don't already have one and to update your contact details. It's a good idea to set this up now as the website is likely to get very busy when it goes live on 13th May.

You can find both your UTR and NI number on your tax return. If you're setting up your Gateway at the same time you'll need to provide email/mobile details and you'll need to set up additional security measures to identify you using either security questions or drivers license details or your passport. The system can time out so it's a good idea to have all the details to hand.

I’m still worrying about eligibility though 🥺

I did mine this morning. It asks you to keep proof of los of earnings, sort of. I have a monthly billing record and I can easily show less jobs coming in. I can show that I have only billed about 20% of what I did last November, half of the year before and only a coupke of hundred pounds more than the year before that - forest full year trading!

It's only a spreadsheet but should be enough for an at-a-glance evidence, backed up by my full accounts!

I've applied as know my work is reduced. I don't have any spreadsheets as proof as just tend to keep diaries but I suppose I could cobble something together if needed.

I can claim mine from tomorrow, a couple of friends have claimed today and the system worked fine as before.

You qualify for this grant if you have a reasonable belief that your business will have a significant reduction in trading profits due to Coronavirus between November 1st and January 31st

So if you break that down you are being asked to assess/guess what's going to happen in your business over the next couple of months. The only known quantity there is how well you did in November which may not be representative in any way of your usual business activity in a normal year. Obviously you can wait a while and see how you do but that's just not an option financially for many people at this stage. If you can wait however you can claim up to 29th January 2021.

On HMRC's website they've highlighted the terms 'Significant reduction' and 'Reasonable Belief', neither of which come with a specific definition. HMRC have made it clear that it is your decision based on your individual and wider business circumstances, so they know this is not a one size fits all scenario. They've also said that you 'should' wait until you have a reasonable belief before claiming, not that you 'must' wait. However you 'must' keep evidence to show how you were impacted as before but what form that evidence takes is up to you - mine is a combination of work diary, bank statements plus various emails etc showing stuff getting cancelled. And my big sad face.

HMRC have also added some examples to help you decide if you should claim......

www.gov.uk/guidance/how-your-trading-conditions-affect-your-eligibility-for-the-self-employment-income-support-scheme#examples

There are a couple of things worth noting. Reduced profits due to the purchase of additional PPE such as masks etc is not a reason to claim. Quarantine preventing work after foreign travel is not a reason to claim. Choosing not to look for or replace lost work is not a reason to claim - this one could be particularly messy to prove if HMRC are determined to paint you as a Netflix addicted slacker unless you have a pile of job applications, which a lot of self-employed people simply won't have.

So the big question is are you confident you can explain why you thought you were worse off from November to January due to the impact of Coronavirus alone. And can you prove it, on the rare off-chance that you could be asked. HMRC have said they are not seeking out small mistakes and innocent errors.

And really really importantly with this grant. If you do take it and then have a corker of a December and January you can tell HMRC you got ahead of yourself and pay it back voluntarily but make sure you do that by 31st January to avoid them treating it as penalty worthy.

Thanks snorkel, that’s a really really helpful post. Makes things about as clear as possible consider it’s all a bit open to interpretation.

My claim is eligible from tomorrow too.

I've just claimed the 3rd grant, I felt uneasy doing it as I'm unsure of what kind of loss they are looking for. I have lost hours as I'm a domestic cleaner so have lost my clients who were shielding/elderly or those who have lost hours too.

There are a couple of things worth noting. Reduced profits due to the purchase of additional PPE such as masks etc is not a reason to claim. Quarantine preventing work after foreign travel is not a reason to claim. Choosing not to look for or replace lost work is not a reason to claim - this one could be particularly messy to prove if HMRC are determined to paint you as a Netflix addicted slacker unless you have a pile of job applications, which a lot of self-employed people simply won't have. I guessed that they expect us to have purchased PPE earlier in the year! Quarantine was a wierd one, but I supose it would have been a choice?!?!?! And choosing not to look for replacement work is a no brainer... there is no other work out there at the moment, for me and I am still trading viably!

I'll be looking at increasing work after Christmas, when there is always a lull and I can be more certain of reaching the right person in any office!

But tis weird! If you are furloughed youy CANNOT look for other work!!! So I have assumed they don't mean work that isn't your actual business! My assumption based on their wooliness!

[quote Snorkelface]@pobparker - the short decreases would qualify but more to the point you're being asked to consult a crystal ball here because the grant is available in advance rather than retrospectively. You've had no support during September and October and are being asked to consider what happened in November and guess what might happen in December and January. It's also not specifically comparative, as in 'less demand than lat year' or 'less than planned' and nor does it say how much demand needs to be reduced by or what constitutes demand - is it less income, less enquiries, less future bookings for later in the year that you'd expect to have now? Less demand because you've had to reduce the services or products you have to offer because of supply chain issues or lockdown restrictions? There's so many variables when it comes to self-employment across so many industries. Last time the details of what 'adversely affected' might mean (it was never actually defined) became more and more detailed once the actual claim portal was launched with updates and examples given by HMRC so I'd wait until they launch it and see what additional details they put.[/quote]
@Snorkelface I've just read through this post and you've been so incredibly helpful to everyone else's queries.

In the above quote, I found this part:

It's also not specifically comparative, as in 'less demand than lat year' or 'less than planned' and nor does it say how much demand needs to be reduced by or what constitutes demand - is it less income, less enquiries, less future bookings for later in the year that you'd expect to have now?
particularly pertinent.

I have not had too much of a drop in work compared to previous years, however my youngest child started school in September and therefore I was expecting to earn considerably more this year as I would've been working 3 full days as before and at least two more half days....

My accountant is advising I should be comparing retrospectively rather than based on an estimated prediction but it seems you would possibly disagree with that....?

@MaHeidsGouping - that sounds perfectly reasonable to me in terms of claiming. I say write down your reasons for claiming at the time of the claim, keep a note, always. It's so much easier if you ever have to explain yourself later. Also worthy of note is that it's not your activity or finances that are making you uneasy about the claim, it's the ambiguity of HMRC's wording - which to be fair to them is probably the best they could come up with to try and reach everyone.

@CuriousaboutSamphire - I was wondering if the PPE was because on the second grant, when being 'adversely affected' was all the rage, because they added a clause with that grant about buying PPE etc qualifying you as being 'adversely affected'. But a pack of masks for a fiver from Tesco might not be the significant reduction in profits they're looking for now! I found the travel a bit odd. I can understand if someone went on holiday knowing they'd have to self-isolate on their return but some people got caught out as travel restrictions kept changing. The looking for work one is a bit mental, but if you're furloughed you can actually look for other work, you can work as many jobs as you like as long as your contract with the furloughing employer allows it. Pick For Britain (what happened to that then???) was aimed at the furloughed not the self employed unbelievably. I fancied a bit of fruit picking.

Ah! Many I know weren't given permission. DH for example was told no, they needed him to be ready to go when they could restart their contracts. But they are telecoms/ construction, often vital infrastructure!

@Mallowmarshmallow - well one thing to consider there is why aren't you doing what you expected to do, presuming you've ended up with more time now your youngest in school. That extra work has not happened because.............? A lot of it will boil down to what you do, how you earn money from it, how is that work generated etc, everyone is different. However HMRC have given a bit of guidance on this in terms of evidence they would want to see. Examples of proof include business accounts showing a reduction in activity compared to last year (so that's retrospective based on known amounts) or records of cancellations, reduced demand etc (current/future, could be any amount). Both are acceptable, if you can prove them. What can you prove? Your accountant will always err on the side of caution, as they should!

OK, to work through my fears about the claim I've done the following:

Politely asked two of my established clients to email me confirming they cannot currently offer me work owing to Covid. Both immediately did so. They were previously regulars but haven't been able to send out work since March, and both made it clear that they intend to use me again as soon as the effects of Covid ease.

Compared my takings for November and bookings for December/January directly against last year. They are clearly down, even though this November was actually busy after a poor October (still a little below last year, though). I still have no January bookings, although I normally would have some by now, and I have fewer active clients to draw upon. Unless more work comes in I will be about £2,000 down on the same 3-month period last year, which for me is very significant.

I feel better having done all this.

I've also recently registered with an online platform used by people in my profession to look for new clients. I haven't used it before because I've had plenty of clients on my books keeping me busy. Hopefully that shows I'm seeking work in new ways without me having to also consider taking a job doing something totally different! Really don't want to divert my energy away from my own sole trader business and area of expertise, especially when I think there is a good chance I will bounce back as long as I keep doing my best work for the clients I still have.

It's all so scary though.

@MaHeidsGouping hope you don't mind me asking, I'm a domestic cleaner as well. I haven't claimed mine yet, going to wait.

I'm down a few hours for November but not many. How many are you down, to claim. Im not sure what to do, January could be bad if families don't stick to the rules.

I've only claimed the first grant.

Tootsey I usually do 16 hours a week so I can work around school runs. When I went back after lockdown I was down to 8 hours a week then when it was announced again that no mixing of households (I'm in Scotland) I lost another 2 hours as she is in the vulnerable category and got scared so cancelled. So far I've only added one client for 3 hours and that was only 3 weeks ago. I'm in a high level 4 where everything is basically shut.

It might only be a loss of 7 hours so not substantial to some but it is for me plus January is going to be a total shitstorm for people self isolating.

@ShortSilence - that's a great example of record keeping/evidence. And the relief that comes with it of knowing you've ticked some boxes. Also getting in contact with clients to ask for confirmation that they haven't been able to use you has the added bonus of gently reminding those clients to use you again when they can.

It's also good to remember that HMRC are far more interested in people actively defrauding the system, which is a bit different from worrying about qualifying 'enough' for the grant. Any one not sure can still wait and claim any time up to the 29th of January, the 30th November date was just the day HMRC started accepting claims, there's plenty of time to see how the next couple of month pan out. Or you can voluntarily pay back the grant by the end of January if you've predicted tumbleweed rolling past for the next couple of months but things end up better than you thought. I'm expecting very little at all to come in, I'm very happy to be proven wrong, but I'm taking the grant in the meantime.

Doing my claim...........

So these are the three stages of the claim portal, I've bolded a few bits to highlight what's changed or been discussed on here.......

1. Confirmation

You need to declare you traded in the tax year 2019 to 2020, intend to continue trading, and you either:

• are currently trading but are impacted by reduced activity, capacity or demand due to coronavirus

• have been trading but are temporarily unable to carry out your business due to coronavirus

You also need to confirm that you reasonably believe you will suffer a significant reduction in trading profits due to the reduced business activity, capacity or demand, or inability to trade during the period 1 November 2020 to 29 January 2021, due to coronavirus.

HMRC expects you to make an honest assessment about whether your business suffered a significant reduction in trading profits, but there is no defined amount.

1. Evidence

HMRC expects you to make an honest assessment about whether your business has been impacted by a significant reduction in profits and to only claim for the grant if you need support.

If you believe you will suffer a significant reduction in trading profits due to reduced business activity, capacity or demand, or inability to trade during the period 1 November 2020 to 29 January 2021, you must keep a record of evidence to support this.

1. Declaration

By submitting this claim, you are confirming the following:

• you traded in the tax year 2019 to 2020 and intend to continue trading

• are currently trading but are impacted by reduced activity, capacity or demand due to coronavirus, or have been trading but are temporarily unable to carry out your business due to coronavirus

• you reasonably believe you will suffer a significant reduction in trading profits due to the reduced business activity, capacity or demand, or inability to trade during the period 1 November 2020 to 29 January 2021 due to coronavirus

• your claim is in accordance with HMRC’s published guidance

the information you have provided is correct, to the best of your knowledge

• if any of this information changes, you will contact HMRC to amend the claim

• The grant does not need to be repaid, but it is subject to Income Tax and self-employed National Insurance contributions. You will need to report the grant on your 2020 to 2021 Self Assessment tax return.

Warning
HMRC will check claims and take appropriate action to withhold or recover payments found to be dishonest or inaccurate.

So, one thing that has been changed is the date, the grant covers 1st November - 29th January, rather than the 31st January, this was changed just before the claim portal went live. 29th January is also the last day you can make a claim for the third grant.

Also HMRC have confirmed there is no defined amount applied to the reduction in trading profits.

And they've also said to only claim 'if you need support', which I don't recall seeing anywhere before in their info.

The claim's process was as efficient as before. If you're making a claim remember to print or download or screen shot the details.

They do send you a confirmation email!

Dear XXXX
Your claim reference: XXXX
We have checked your claim and can confirm that we are now processing your grant payment.
This means you can now expect your payment within 3 working days of this email.
Our phone lines are very busy at the moment so please don’t call HMRC about your payment before the next 3 working days have passed. For more advice you can use our guidance on GOV.UK, speak to your tax agent, if you have one, or access our webchat service.

And then a warning about scams!

The amount on the final screen of your application should be identical to your first SEISS payment.

I’m curious as to why they would have changed the date. Anyone know?

I wonder it is to not have the same date as self-assessment day and also to make it a weekday.

If applying for the 3rd grant does your business have to be affected for the whole 3 month period? DH didn't work in November due to lockdown but Dec & Jan should be ok.

The 'rules' are different this time which makes me think you should only claim if every month is affected.

It's over the whole 3 month period! And they don't state how much so you have to make your own mind up on what is a "significant reduction"

I already know November and December were slow months for me. I usually have a last minute Christmas rush but won't this year!

If your DH didn't have any income during November that must surely be counted as significant?!?! 1/3 down is not a trifling amount!

Did everyone get an invitation email for applying?
I did with the other 2 grants, but have heard nothing regarding the third..

Yes @jellykat but it went to my junk mail.