HMRC to block SEISS grants based on non response

We have been informed that over 24,000 self-employed traders who have claimed a self-employed income support (SEISS) grant have been contacted by HMRC to see if they are still trading.

A small minority of Sole-traders (around 1% of all who have claimed SEISS) in the the first or second SEISS grants by 30 September 2020 have been contacted.

HMRC have been prompted to contact self-employed traders they feel have ceased trade based on by the following information:-

1. A cessation date for the business reported on the 2019/20 Self-Assessment tax return.
2. An application from the business to deregister for VAT.
3. From another reliable source.

The reason we have written this blog entry is due to the flawed criterium HMRC have used to contact those business they feel have stopped trading. Cancelling a VAT registration does not automatically mean the business has ceased trading. COVID-19 has had a deep impact on many self-employed businesses, and some may have chosen to deregister based on the fact they are trading below the VAT deregistration threshold.

So our advice is to check your emails carefully to ensure that HMRC have not contacted you about a cessation of trade.

If you have received a HMRC cessation of trade email, what should you do?

HMRC have outlined that you will need to respond to them by completing an online form to confirm you have stopped trading and permanently closed your business.

If you have not stopped trading and not closed your business, you still need to tell HMRC. HMRC have informed that they may contact you to ask for evidence to prove you’re still trading.

The enclosed form can be completed by following the enclosed link:-

https://www.gov.uk/government/publications/tell-hmrc-if-youve-stopped-trading-and-review-your-eligibility-for-the-self-employment-income-support-scheme

What is the deadline response?

If you do not respond to HMRC’s email by close of business on Friday 20 November 2020 you will be prevented from applying for further SEISS grants.  If you applied for the grants after 22 July 2020 you must tell HMRC within 90 days of receiving the actual grant.

If you have any further questions please do not hesitate to contact a member of our dedicated tax team.