Coronavirus:  Self-employed scheme questions answered

Today’s Blog concerns the recent rolling out of the Self-Employment Income Support Scheme or SEISS. The launch of SEISS has prompted dozens of individuals to email or telephone our office asking for help/advice.

What does ‘adversely affected’ really mean? What happens if a claimant makes an incorrect declaration by mistake?  I will attempt to answer the most common questions asked on SEISS.

SEISS Background

HMRC proudly trumpeted last Wednesday, 13th May, that the scheme had gone live! Unfortunately, it had only gone live for a select few. It transpires that with millions of people expected to be claiming, HMRC secretly decided that they would stagger access to their site over the next ten days to ensure the system didn’t fail.

The launch, however, quickly highlighted four problem areas:

1. SEISS Eligibility checks

At MJ&Co, we immediately found issues with HMRC’s eligibility tests after experiencing a string of false checks and anecdotally, so did most other accountants.

HMRC simply isn’t looking at things like whether someone changed a legal form or if they ceased to trade. The eligibility check is just looking at the numbers and compares your trading profits to your non-trading income.

This results in a multitude of false positives and even false negatives. Many of our clients believed that they were eligible only to be told they aren’t. This might be because the information in HMRC’s systems isn’t up to date. For example, an amended tax return was filed, and not updated on HMRC’s systems.

2. SEISS Government gateway issues

We have also seen problems with many clients who didn’t have a government gateway account and have been unable to set one up. Unfortunately, we are not allowed to do this on a client’s behalf, so it’s down to the taxpayer to make a claim, and if people can’t set up their government gateways because they are not digitally capable, then they are going to struggle.

We have tried to help several clients. As our Practice Manager, Lucy Evans will testify, it can very difficult, not to mention frustrating, to try to instruct our non-tech savvy clients on how to create a gateway account. I am aware that we are not alone with most other accountants also struggling to help certain of their clients.

All is not lost, however, as HMRC is providing a telephone line alternative and have promised to effectively complete the online claim for individuals, assuming that they can provide the same information as if completing an online application.

I would always recommend if somebody is setting up a government gateway account that they do it through the eligibility checker. Because it’s a streamlined process for getting your application through that doesn’t involve waiting a week for something to come in the post.

Also, for those self-employed individuals who already have their government gateway account, make sure that your contact details are up to date, especially concerning bank accounts.

3. SEISS £50k threshold complaints

We have also experienced a string of complaints about the £50,000 threshold. The main one being that it’s unfair to the self-employed, mainly because there isn’t any tapering built into the scheme.

To highlight the point, if your self-employed earnings in the 2018/19 tax year were say £49,500 you would be eligible for the maximum help of £2,500 pcm. However, if your earnings were over the £50,000 threshold, even by a single pound, then you don’t get a penny piece.

4. SEISS Cut-off date

The final major issue that we’ve had clients complaining about is the cut-off date. HMRC has only got records up to 5th April 2019, the end of the 2018/19 tax year. But if someone recently became self-employed, let’s say in June 2019. Even though they have been self-employed for virtually a year, they don’t qualify for the SEISS Scheme, nor the job retention scheme. Unfortunately, for this small class of individuals, they are not catered for by any of the schemes.

The most common Small Business questions asked.

• By far the most common question was: As the Chancellor’s extended the furlough scheme until the end of October for employees, will he do the same for the self-employment?

I do not know the answer, but if I were to make a prediction, I would expect it will be extended, but with a lower level of support.

• What does “adversely affected” really mean? HMRC give examples, but I can’t relate these to my circumstances?

Adversely affected is very loosely defined by HMRC, and whilst they do give some examples, I would use your common sense and if something has occurred that is beyond your control and thereby has affected you or your business adversely, put it down.

• If I make an incorrect declaration by mistake, such as claiming as a sole trader when I recently became a limited company and get SEISS funds as a result, what will happen?

Assuming HMRC notice your error, I would expect them to ask for repayment. Still, hopefully, penalties will only be applied if there has been intentional, fraudulent behaviour.

• The eligibility checker shows “The information you have supplied does not match our records” even though I know the information entered is correct. What is the best way forward?

If the checker does not recognise you at all, ring the helpline. If you’ve gone through the eligibility checker and it says you’re not eligible for any reason, but you think you are, there is a link to ask HMRC for a review. At the review stage, you can challenge any information they hold, which you know to be incorrect.

That’s it for today; I publish my next Blog in 3 to 4 days. If you would need more detailed information on some aspect of UK Tax, send me an e-mail and I’ll be pleased to advise further.