Coronavirus Self-Employed & Small Limited Company Help
At the end of November 2020, HMRC published guidance on who qualifies for the third grant. It’s stricter than the previous two grants and you must satisfy three new criteria – you need to tick ALL of them, not just one or two:
1. Your business must continue to be affected by Covid between 1 Nov 2020 and the end of Jan 2021, or be newly affected in this time
Your business must be facing an ongoing hit from coronavirus from 1 November 2020 until the end of January, or be newly affected in this period. So you cannot apply if your business was struggling in, say, August, September and October, but is now no longer affected.
Even if your business took a massive hit earlier this year, you won’t qualify UNLESS you can prove it’s seen an impact during this specific period. Equally, if you’ve not been affected up to now but are newly affected in this period, you are eligible, regardless of what your circumstances were earlier in the year.
2. You need to believe the impact during this period WILL cause a ‘significant reduction’ in trading profits
Before you claim, you must decide if the impact on your business will cause a “significant reduction” in your trading profits.
For many, this will be straightforward, but others might not yet be sure. If this is you, you might need to wait until you have a “reasonable belief” that your trading profits are going to be significantly reduced before you make your claim (eg, after the Christmas period it might be clear that your business has suffered significantly).
Only you can decide what is a “significant reduction” in your trading profits – it very much depends on your business. HMRC says it “cannot make this decision for you because your individual and wider business circumstances will need to be considered when deciding whether the reduction is significant”.
You must keep evidence that shows how your business has been affected by coronavirus resulting in less business activity than usual.
If your business recovers after you’ve claimed, don’t worry. Your eligibility will not be affected as this is based on your “reasonable belief” that your trading profits would have been significantly reduced at the time you made your claim.
While increased costs hit your profits, you CANNOT make a claim if you’ve only had increased costs and no other impact, eg, if you have had to buy face masks and cleaning supplies, but your demand has been unaffected.
3. This ‘significant reduction’ must be due to ‘reduced demand, activity or capacity’ OR being temporarily unable to trade
To show you’ve been hit by “reduced demand, activity or capacity” you need to be able to prove:
You have fewer customers or clients than normal, resulting in reduced activity due to social distancing or Government restrictions.
You have one or more contracts that have been cancelled and not replaced.
You have carried out less work due to supply chain disruptions.
To show you’ve been temporarily unable to trade you need to prove:
Your business has had to close due to Government restrictions.
You’ve been instructed to shield or self-isolate in line with NHS guidelines and are unable to work from home (if you’ve been abroad and have to self-isolate, this doesn’t count).
You’ve tested positive for coronavirus and are unable to work.
You cannot work due to parental caring responsibilities, eg, as a result of school or childcare facility closures.
If you had to close before 1 November 2020 and continued to be closed for a period of time up to the end of January 2021, you can still claim as long as you meet the other criteria.
For any information, do not hesitate to contact us.