To qualify for the SEISS you must be self-employed or in a partnership. However, HMRC’s online eligibility checker only uses information from 2018/19 tax returns and earlier, and so may wrongly indicate that someone is eligible to claim as it hasn’t taken into account the other qualifying conditions which, if they have recently formed a limited company, they wouldn’t meet.
People must declare that they:
- Traded in the tax year 2019 to 2020
- Intend to continue to trade in the tax year 2020 to 2021; and
- Carry on a trade which has been affected adversely by COVID-19
Business owners who were self-employed but have recently incorporated and turned into a limited company are not still self-employed as so do not meet the other conditions.
The LITRG is asking HMRC to clarify their SEISS guidance specifically around if you have your own company, which you work for, you are not self-employed.
The LITRG has suggested that limited company owners pay themselves a salary, as they would as an employee, so they meet the conditions of the Coronavirus Job Retention Scheme instead.
Victoria Todd, Head of LITRG, warned that people may have to repay the SEISS grant if they claim incorrectly.
“People’s hopes may be pinned on the SEISS scheme but it is extremely important for limited company owners to understand that they are unlikely to meet eligibility because although they may consider themselves to be trading, they are not doing so on a self-employed basis. We understand that this is a difficult message, but we need to warn people, because claiming incorrectly exposes such people to possible penalties, in addition to having to repay the grant, if claims are audited later.”
If you are a limited company owner and need help with the government’s coronavirus support schemes, please contact us by email or on 01295 250401.