Ongoing changes to the Coronavirus Job Retention Scheme (‘furlough’ scheme) and Self-employment Income Support Scheme (SEISS) could potentially lead to inadvertent errors – and scrutiny from a new tax fraud taskforce. Check the latest details before you claim.
Claims for the 4th SEISS grant are now closed (as of 2 June 2021). The will be one further grant in the future: SEISS 5.
For SEISS 4, businesses were required to 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. It is expected that the anticipated reduction in profits will be reflected in the figures reported on the relevant tax return, in due course. Businesses were also advised to keep evidence to support any claim.
In addition to the above requirements, SEISS 5 introduces an additional turnover test. The amount of grant available will depend on how much turnover has fallen between April 2020 and April 2021.
To be eligible for SEISS 5, you must have submitted the 2019/20 tax return before midnight on 2 March 2021. HMRC will base calculations for SEISS 5 on 2019/20 tax return figures, and more recent years than for earlier SEISS grants. This change to the reference period could produce unexpected results. It will also open the door to some new claimants, such as those who only became self-employed during the 2019/20 tax year (provided they meet other eligibility conditions). Conversely, those eligible for earlier SEISS grants may receive more or less than before.
Furlough scheme changes
The furlough scheme will run until 30 September 2021 and is next set to change on 1 July 2021, when government contributions drop.
From July, employers will be required to make 10% contributions to wages. In August and September it will rise to 20%.
Claims can currently be made for staff who were employed on 2 March 2021, so long as a PAYE RTI submission has been made to HMRC for an employee between 20 March 2020 and 2 March 2021. You do not need to have made a furlough claim for an employee before 2 March 2021 to make a claim during the current phase.
A closer look at claims
COVID-19 support schemes are getting increasing public attention. Whilst HMRC stresses it is not looking for innocent errors, following the publication of details of employer furlough claims, the introduction of new SEISS recovery powers, and a new Taxpayer Protection Taskforce, it’s important that any claim can stand up to HMRC scrutiny.