HMRC have issued some more detailed guidance about Round 3 of SEISS, which is due to start accepting applications next week.
For Rounds 1 and 2, you were only eligible (among all the other criteria) if your business was “adversely affected”.
This has now changed, for Round 3 – you now have to have experienced a “significant reduction” in demand for your services between Nov and Jan, which hasn’t been replaced by other demand. You also have to “reasonably believe” that your profits for the whole year will be lower than usual because of that reduction in demand.
(Two important notes here: (i) what you need to have is a “reasonable belief” NOW, regardless of what actually happens in the event and gets analysed later. You are not breaking the law and HMRC will have no claim against you, whatever your outturn for the year, provided you act in accordance with a demonstrable “reasonable belief” now. (ii) It doesn’t matter if your profits for the year are higher because of what happened in earlier periods in the year (let’s say for example you lucked out and your yoga/fitness videos went viral for the summer, earning you an unusual bonus back then which has since dried up). You’re being asked now to make a judgement about what the effect on your profits will be of the reduced demand only between Nov and Jan.)
Many of our clients are actors, and we do hundreds of tax returns on behalf of actors. This change is unlikely to affect actors. It should be the work of seconds for actors to be able to establish, if challenged, that there has been reduced demand for their services in 2020, alas. Even if you have picked up one of the surviving Xmas shows, you will still have experienced reduced demand for your services in TV, Film, ads, voiceovers, corporate training etc. The vast majority of actors will reasonably believe that this reduction will lead to lower profit for the year than if that reduced demand had not been there.
However this might get complicated in some extreme cases, and it will be significant for some of our clients with other kinds of businesses.
For example, if you were a Sports Massage Therapist, under Rounds 1 and 2 it would have been sufficient to show that your increased costs as a result of the crisis (eg having to buy PPE, additional cleaning costs, cutting client numbers in order to have more cleaning time) meant an “adverse effect” and therefore eligibility.
That’s not sufficient now. That therapist would apparently have to show, by contrast, that they actually had fewer requests for client sessions in order to qualify. (Although even then, there is a helpful additional term about reduced “capacity”, which may be enough to secure eligibility.)
We can imagine that there might be an actor who has several years of trading and was eligible for Rounds 1&2. That actor might never have done a Xmas show before but might now suddenly have been given a well-paid 12-week lead in a West End show – an unexpected bonus boost which has come about for reasons that are nothing to do with the Covid-19 disruption, and would have been as likely to have occurred anyway. That person’s eligibility status will be more complicated, and they should seek advice.
This is a fast-developing area of regulation and if you are in any doubt please contact us for free advice about your situation. There may well be arguments that could successfully be made in your favour in particular situations: don’t conclude that you are ineligible without checking with us FOR FREE.
If you have any problems or questions: call us for free advice on 08000 487626, message us on Instagram @accounting4actors or email hello@accounting4actors.co.uk . Our advice on Covid-crisis matters is free and always will be.
Please visit www.accounting4actors.co.uk and find out about tax for actors, accounting for creative and cultural industry professionals, actors’ tax returns, and all accounting for creatives.