Rishi Sunak recently announced that an extra 600,000 self-employed business owners would be able to claim the fourth and fifth Self Employed Income Support Scheme (SEISS) grants.
The one condition is that applicants must have submitted a tax return by March 3 2021.
But vague details, complicated processes, tight deadlines and worries around scammers mean that many could be missing out, warn financial experts Old Mill.
One example is when those who apply get contacted by HMRC and are sent an email with instructions on how to verify their identity. They then have two days to upload digital copies of their bank documents and ID to the HMRC Dropbox. If they don’t, the Dropbox link will expire and the applicant will fail the pre-verification.
“There are a number of areas where things can go wrong (just opening a brown envelope from HMRC for instance), and I have real concerns that some people may have difficulties negotiating these pre-verification checks or inadvertently miss deadlines,” said Chris Bowles, director of Old Mill.
“There’s also a fear that many traders will see this HMRC call as another sophisticated attempt to obtain sensitive personal information at a time when attacks from scammers are widespread.”
Grants are subject to Income Tax and National Insurance Contributions
Even after the pre-checks have been passed, the process of receiving the grant is complex.
Bowles commented that new claimants will be subject to both Income Tax and National Insurance Contributions.
“It’s important for people to bring their tax affairs fully up-to-date, rather than leaving everything until the last minute, as this information affects your eligibility, so it makes sense to be proactive in order to get a handle on it,” he said.
“Also, the final grant has specific conditions attached around whether your turnover has dropped by the required 30 per cent that’s needed to claim for the higher grant amount when it opens in July.
“This can all be a bit confusing for business owners trying to work their way through what can be a bit of a minefield for the first time so I would urge people to speak to their adviser wherever possible.”
What should I be aware of in the SEISS pre-verification process?
Old Mill have a detailed step-by-step process listed on their website, but here are some key elements to look out for.
- If you haven’t received a letter already, you’ll receive one by mid-April. There’s a limited window to process the application
- You’ll receive a call from HMRC within two weeks of receiving the letter. It’s at this time that you’ll pass on the email address to receive your Dropbox link
- You’ll only have two days to send over your digital documents, so it’s best to have these ready in advance
- The online portal for the fourth SEISS grant will open in late April (date TBC), but all pre-verification steps need to be completed before you can make a claim
The firm also provide more information about the fourth and fifth grants. The fourth SEISS is said to be 80 per cent of your average trading profits, capped at £2,500 per month. It will be paid in one lump sum for three months, giving you a maximum amount of £7,500.
The fifth grant will be worth:
- 80 per cent of three months’ average trading profits, capped at £7,500, for those with a turnover reduction of 30 per cent or more
- 30 per cent of three months’ average trading profits, capped at £2,850, for those with a turnover reduction of less than 30 per cent.