SEISS Update: HMRC finally attempt to define "adversely affected"

Following on from my blog last week, HM Revenue & Customs have produced some useful examples (read them here) to help illustrate exactly what they view being "adversely affected" might mean for the purposes of the first and second grants under the scheme.

To recap on my recent blogs, it's important to remember that in order to be eligible for the scheme, you have to have been (and continue to intend to) carrying on a trade which has been adversely affected by COVID-19 and the lockdown measures put in place by the Government and various sectors of the economy (building sites shutting down is a good example, as the Government didn't mandate that). 

Unfortunately, when looking through HMRC's examples of whether a trade has been adversely affected, there seems to be no specific monetary threshold, and no requirement for income or profits to have fallen by a certain amount as many (including myself) had hoped. Given that HMRC has used builders as their chosen example, it's worth noting that in conversation with clients in that sector many have now returned to work (equally many have not), but those that have are reporting having greatly reduced quantities of work that is impacting their turnover by as much as 50-60%. So financial impact has explicitly not been cited by HMRC as an example of being "adversely affected".

Instead, it seems to hinge on whether or not the person carrying on said trade was "able" to go back to work or not. So following on from the examples given it would seem the only way for anyone to qualify for the second tranche of SEISS is to either have their workplace closed down, or contract the illness (or someone else in their household does) and have to self-isolate as a result.

So, unfortunately for all you builders out there that have been able to go back to work, no second grant for you, it would seem. However, if you're unable to find work (even though the sites are open) as a result of social distancing requirements, then maybe there's some hope.

Those claiming under the scheme should evidence how and why their business has been adversely affected by COVID-19 and keep a record of this. For the first round that will be relatively easy for most, but the second dose of SEISS is most likely to be of no help to the beleaguered self-employed construction industry. 

So, if you were hoping for a second bite of the cherry in August please be wary as HMRC's systems will allow you to make the claim without having to prove being "adversely affected" at the time of claim. However, when you file your 2020/21 self-assessment tax return you might get a nasty surprise (check out this blog for further details)! This is especially important as HMRC and the Government has been quite clear that advisers shouldn't be making claims for their clients (the word fraud was used I believe).