Warning

There may be no pot of gold at the end of this rainbow

The Third Self employed Income Support Scheme grant is available from 30 November to 29 January 2021.

Further to our earlier 2nd lockdown brief, we now have more information about what actively trading and impacted by mean. As anticipated, this comes with more restrictions so we have several warnings.

Warning –the qualifying rules for claiming have changed

There are two aspects to be able to claim

Only those eligible for the first and second grant are eligible for the third grant; and
You must meet the new qualifying rules about being impacted

Do not just claim it

You must meet new criteria to claim
If you claim when not entitled you will have to refund the grant AND pay a penalty of up to 100% of the grant
You must keep evidence to justify why you claimed

New qualifying rules

Your business must be adversely affected due to coronavirus and

Currently trading but impacted by reduced demand due to coronavirus; or
Have been trading but are temporarily unable to do so due to coronavirus

This means during the period 1 November 2020 to 29 January 2021 your trade must be impacted and you must

Intend to continue to trade; and
Reasonably believe there will be a significant reduction in your trading profits due to reduced activity, capacity or demand or inability to trade due to coronavirus.

HMRC will examine your 2021 Tax Return
The test about reduced trading profit is for your whole accounts year, not just the period after 1 November 2020. You must look at your profits for the whole year to see if the impact after 1 November is significant
Having reduced profits due to higher costs such as buying PPE does not count, you must have reduced demand
Having reduced activity solely due to self isolating because you are returning to the UK from say a holiday does not qualify as reduced demand
The reduced demand or activity must not be voluntary

Examples

You must have reduced demand and believe you will have significant reduction in profits
1. You have fewer customers than normal resulting in reduced activity due to social distancing or government restrictions e.g. a café has fewer customers which reduces takings so can claim
2. You have suffered cancelled contracts that are not replaced so can claim
3. Doing less work due to supply chain disruptions e.g. you cannot get the goods you need to complete work due to coronavirus which will reduce profits so can claim
Unable to trade and believe you will have significant reduction in profits
1. Your business had to close due to government restrictions e.g. a pub or hair stylist has had to close which will significantly reduce profits so can claim

You cannot claim if

You do not think you will have a significant reduction in profits; or
You can reschedule your work so you do not lose any profits; or
Your profits are only reduced because you have incurred extra costs and have not lost any customers; or
You have reduced demand because you went on holiday and had to self-isolate on return; or
You are reducing your business as you want more free time - this is not a reduction caused by coronavirus; or
You lose work which you could replace but choose not to look for any replacement work

Recommendation

A lot of this is judgmental - you must keep evidence of how you came to your decision to claim

Types of evidence to show you were impacted are

Details of contracts lost
Details of how you tried to obtain replacement work
How your supply chain was impacted
Government guidance telling you to close
Track and trace records for isolating

Warning - Self Employed Third SEISS Grant Available