Further guidance has been released on the eligibility criteria for the third SEISS grant, the conditions for which have now been tightened.

As a reminder the earlier government policy announcements indicated that to qualify for the third grant, the business needed not only to be adversely affected due to the coronavirus but also to:

  • Be currently trading but be impacted by reduced demand due to coronavirus; or
  • Have been trading but be temporarily unable to do so due to coronavirus.

The latest guidance now includes an additional test:

  • The business intends to continue to trade; and
  • Reasonably believes that there will be a significant reduction in trading profits due to reduced activity, capacity or demand or inability to trade due to coronavirus.

From the information we have been able to obtain, we gather that the significant reduction test will be applied to the accounting period as a whole.

So as an example, if you apply the test to a 31st March year end, your profits in the year to the 31st March 2021 will need to be significantly less than those made in the year to the 31st March 2020.

A couple of issues arise from this additional condition;

  1. You will in effect need to forecast your expected results up to the 31st March 2021 to confirm eligibility. This is difficult at the best of times, let alone with the additional complications added by lockdowns and the 3 tier system.
  2. We can’t see how HMRC will be able to effectively enforce this condition which could cause problems in the future when they come to review the claims.

Additional guidance published by HMRC and that is worth noting;

  • HMRC have specifically stated that a reduction in profits due to increased costs (such as having to buy PPE) does not count for the purpose of the grant.
  • No claim can be made where the reduced activity, capacity or demand is caused solely because the person is required to self-isolate, or care for a person required to self-isolate, as a result of travelling to the UK.

We hope the above was useful and if you have any queries please get in touch.

Tel: 01392 360008