Taxpayers are being given dates when the fifth grant portal opens for them. The first of these claims will be later this week.
The eligibility criteria for grant five are largely the same as those for grant four but the key change is the introduction of a turnover test. There has been some misunderstanding about the turnover test. Turnover reduction in the pandemic year does not in itself qualify taxpayers for the grant but it merely dictates the amount of the grant for eligible claimants.
Claimants will need to declare their intention to keep trading in 2021 to 2022 (without incorporating their business) and that they reasonably believe there will be a significant reduction in their trading profits due to the impact of reduced demand caused by COVID-19 between 1 May 2021 and 30 September 2021.
There are two levels of grant. HMRC will work out your grant amount based on how much your turnover is down in the pandemic period (see below) by comparing your turnover to reference period (pre-pandemic income as defined below).
So what is the meaning of turnover?
Put simply ‘turnover’ means the takings, fees, sales and money earned by the business calculated in accordance with Generally Accepted Accounting Practice (GAAP).
Please note that turnover excludes any coronavirus support payments which includes SEISS grants, Eat Out to Help Out payments and local authority or devolved administration grants.
Meaning of the ‘pandemic period’
The ‘pandemic period’ is the 12-month period either the year to 31 March 2021 or, where more appropriate, the year to 5 April 2021.
Meaning of the ‘reference period’
The ‘reference period’ is the tax year 2019-20; however, the taxpayer can use 2018-19 in certain situations.
We feel that our clients who need to supply turnover figures will most likely need our help as this is not straightforward. The figures needed are those determined by UK GAAP and need to be computed to take into account debtors (amounts owed by customers etc), partnership profit share and pro-rata calculations will need to done where the period of account is not twelve months. There will be complications where your year-end does not correspond the 31 March or 05 April dates required.
We are here to help but if we see a large demand for help will be prioritising this based on individual need. Please bear with us whilst we help those clients with the most urgent needs.
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