A refresher from ACCA on what you need to know to make a claim.
Applications for the third grant for the self-employed opened from 30 November and claims must be made by 29 January 2021.
The third taxable grant is worth 80% of the applicant’s average monthly trading profits, paid out in a single instalment covering three months’ worth of profits, and capped at £7,500 in total.
To qualify, applicants must have traded in both tax years 2018/19, and submitted a self-assessment tax return on or before 23 April 2020 for that year, and 2019/20. To make a claim for the third grant the business must have had a new or continuing impact from coronavirus between 1 November 2020 and 29 January 2021.
Additional qualifying criteria have been imposed by HMRC in respect of the third grant and presumably this will also apply for the fourth grant expected to be available from February. Applicants must now declare themselves to be either:
- currently trading, but impacted by reduced demand due to coronavirus, or
- to have been trading but temporarily unable to do so due to coronavirus.
Therefore, when claiming the third grant, the individual will need to confirm to HMRC that:
- they intend to continue to trade; and
- they reasonably believe there will be a significant reduction in their trading profits for the period from 1 November 2020 to 29 January 2021.
HMRC’s latest guidance states it expects an ‘honest assessment’ about whether or not the business will suffer a significant reduction in trading profits due to reduced business activity, capacity or demand or inability to trade due to coronavirus during the period 1 November to 29 January 2021, and applicants will be expected to keep evidence to support this. As the significant reduction in trading profits test applies to the tax year as a whole, this means that claimants will have to forecast their results for the rest of the tax year to establish eligibility.
Self-employed individuals who were not eligible for the first and second grant, based on the information in their self-assessment tax returns, are not be eligible for the third.
Where a person claims a grant to which they are not entitled, and they do not repay it, there is a 100% income tax charge plus, in certain circumstances, a 100% penalty.
This article has been shared from ACCA In Practice, to whom copyright belongs. Whitefield Tax are an ACCA Member Firm