HMRC are now asking certain self-employed people to prove that they are still in business before they can claim the next SEISS grant.
This is only for those who have indicated that their business ceased trading in the period from 6 April 2018 to 5 April 2020. A pause in business is acceptable, but you must be intending to continue to trade once the covid-19 restrictions are lifted.
To be eligible for any of the SEISS grants you must:
- have been in business in the tax years 2018/19 to 2020/21, OR
- in 2019/20 and 2020/21, if the business commenced after 5 April 2019.
HMRC has checked Self-Assessment tax returns for 2018/19 and 2019/20 and has emailed taxpayers who have indicated that their business ceased in either period, but who have also claimed an SEISS grant. Your tax advisor will not have received a copy of this letter only YOU WILL!
However, you may have missed this email as HMRC are not in the habit of sending emails directly to taxpayers. However, it is important that you react quickly, as if HMRC do not receive a response by Monday 22 March, you will be blocked from receiving further SEISS grants and may also be subject to a tax enquiry.
There are circumstances where HMRC may think you have ceased your self-employed business, even though this is not the case. For example, if one of the partners left the business, changing the business structure from a partnership to a sole trader; an individual may also have ceased one business and/or started a new business in those tax years.
As long as there was a business in existence for at least part of both 2018/19 and 2019/20, even in two separate trades, they will qualify for the SEISS grants.
In that case the taxpayer needs to prove the trade has continued, and HMRC suggests that evidence could be provided in the form of:
- advertising by the business
- business receipts or sales invoices
- contracts to provide goods or services
- payments made out of a business bank account
It seems that the taxpayer doesn’t have to show evidence of sales completed, but it does need to show there is an intention to carry on being in business.