Sports Freelancer Collective update May 5

HMRC has just posted online new information about SEISS, which clarifies matters such as eligibility criteria for the grant that so many of us hope will help us through this uncertain period. Here are the two most important links, which I invite you to read very carefully as it seems to me that some of the government's criteria will not be fulfilled by some of our members whom we'd initially thought would be eligible for help. I'll be asking our accountant Niall McGinnity for more details and will get back to you.

https://www.gov.uk/guidance/claim-a-grant-through-the-coronavirus-covid-19-self-employment-income-support-scheme

https://www.gov.uk/guidance/how-different-circumstances-affect-the-self-employment-income-support-scheme#stateaid

Remember that if you have specific questions about this or any other SEISS/Furlough topic, do send them to me so that I can pass them on to Niall. Just check first that they are not already covered in the FAQ document which I attach to this email.

Last, if any of you is currently facing exceptionally difficult circumstances, whichever they may be, professional, personal, psychological or financial, do get in touch with me. Our Collective is a purely voluntary organisation, with no means and resources of its own, but we'll try our best to help. What you tell me will be treated in strict confidence.

Best wishes to you all

Philippe

SEISS Queries - Accountant Niall McGinnity's responses

The majority of my income comes as a PAYE freelancer at ****.  Based on the information given, **** will honour all bookings made up until 31^st May with 100% pay, 80% furlough and 20% top up.  It sounds great on the face of it, but one small problem.  The department where I get most of my work only publishes rotas one month in advance.  That means the May rota wasn’t done when we went into lockdown, hence no bookings were officially made for the whole of May for freelancers.  I know for a fact that had things progressed normally, I would have had a significant amount of work in May.  But now I feel like I’m screwed, because although my bookings for April will be honoured, I’ll get nothing for May.  Any idea on where I stand?

NIALL: I think this specific one needs a discussion with your main contact in the company in question.  It's basically an offer by the company to pay based on bookings.  If you have been paying paye via the company, the appropriate scheme is the Job Retention Scheme for HMRC support, but it needs to be driven by the employer.  I think at worst it would be appropriate for the company to pay even just the 80% they can claim back based on an average of previous months; but it really does need an urgent discussion with them to participate. 

I went freelance in January 2017 after leaving ****. I set up a limited company & did various consulting gigs until September that year, when I was approached by **** to work on a new sports app. For family reasons I went back to being an employee. In November of last year, I then decided to go back to consulting. My limited company has always remained open & tax returns have been filed since 2017. 

My last contract finished last month & having only worked in sport for 15 years, you can imagine it’s very quiet out there at the moment in terms of freelance opportunities. So I was wondering if I might be entitled to any of the government’s support. I’m not clear on it as it stands despite having read the relevant sections on the government’s website. 

NIALL: Given you have been "employed" via your limited company there is the option to furlough yourself if there is no work at all; this would mean that 80% of the wages you extract from the company would be covered by HMRC up to £2500.  It does not, however, cover dividend income, only wages / salary.  The SEISS scheme would not be available as you are not fully self-employed per the details of the self-employed scheme.   The other options would be to speak to HMRC and ask for time to pay arrangements on any outgoing taxes if appropriate.


1. I only stepped up freelance activities from January 2019 following redundancy so I’m eligible for nothing.

NIALL: If the freelance activities started in 2018-2019 a claim could still be made. However, the condition of at least 50% of the income being self employed would need to be met i.e. total earnings in 2018-2019 less non self employed (e.g. salaried) earnings would need to be more than 50%. Further, the claim would only be based on the profit for the period Jan 2019- 5 April 2019; there would be no scope to pro rata this to a full trading year.


2. My wife set up a business self employed in December 2018 and due to set up fees also reported a loss for last year tax. She too is eligible for nothing.

NIALL: Unfortunately I agree. If a loss was made there is no capacity to claim as its purely based on profits


Tonight's government announcement does not help me, or many others in our industry, who work through their own Limited company.

NIALL: There are quite a few comments on this and the concern is that owner Director businesses cannot claim under either the SEISS scheme or the Coronavirus Job Retention Scheme. There are a few points to make:

Owner Directors definitely cannot apply under SEISS. They are not self employed.

They can, however, confirmed by HMRC, apply under the Job Retention Scheme subject to additional conditions.

They would have to effectively cease all trading for their company to be justifiably in furlough status. Ben Kerry at HM Treasury has been quoted on a CBI seminar as saying that HMT understands that the owner-Director-manager will have statutory duties that can be continued even while on furlough

(iii)The only applicable element of earnings that can be made under the Job Retention scheme is a salary. Not dividends. If the wages were paid at minimum level so as not to attract national and insurance or paye the support would be circa £575 pm

I am completely freelance, and work through a limited company of which I am the sole director. Many clients insist/much prefer that I operate this way.

NIALL: as noted above ref Coronavirus Job Retention Scheme

All of the company's income is generated by me, and all work is declared.

NIALL: as noted above ref Coronavirus Job Retention Scheme

I pay corporation tax, VAT, dividend tax and personal tax, which added up equal around 20k per year.

NIALL: as noted above ref Coronavirus Job Retention Scheme. In addition I would advise:

Cancel the HMRC DD and take advantage of the VAT quarter payments falling between now and 30 June 2020 being deferred. That tax will be due by 31 March but cash can be saved now. Note that HMRC have advised they will take payments by DD so you do need to cancel with your bank to avoid the payment being made

Self Assessment payments on account for 2019-2020 due on 31 July 2020 have been deferred and are not due to 31 January 2020. I would advise anyone who has a payment of account based on their normal revenue levels but who will now be returning a significantly reduced figure to get their 2019-2020 return filed as soon as possible as they may already have paid that tax and potentially overpaid and be due a refund.

Any other business taxes can be deferred by phoning HMRC and requesting a time to pay arrangement. They are giving a 3 month deferral period. The phone number is 0800 0159 559

I have zero work, 100% has been cancelled. I do not know whether I can furlough myself.

NIALL: per advice from a number of sources including ICAEW, CBI and HM Treasury you can be furloughed. I would be happy to speak you and/or your accountant and pass over relevant info.

Do you know what I am eligible for as I earn via PAYE (but not on any kind of contract) and via self-employed - both via same employer (ie ******)?

NIALL: if they earn via Paye via ****** , ****** should furlough them. It’s difficult to assess what they would have been paid under normal circumstances – happy to speak to them direct if it helps and they can share more details.

My situation is complex - this year (19/20) I'm a Ltd company ... last year I had a Ltd company, sole trader and PAYE ... every company I work for wants something different!

NIALL: SEISS would be applicable under the sole trader period potentially but one condition is that trade needs to be continuing. Again maybe one for a direct conversation to understand it a bit better.

I’m a freelancer /  sole trader, but having just checked my last three years accounts, I can see that I’ll average above 50k by a infuriatingly small amount.

NIALL: yes unfortunately over £50,000 means you are excluded from the scheme. They should use the figures reported on their SA returns. If 2019-2020 hasn’t been filed there may be some flexibility there and they should speak to their accountant about any additional costs that would bring profit below the level.

I heard the Chancellor say that the 5% of self-employed people not covered by the scheme had an average income of £200,000.  After Tax, I earn less than 40k a year.  50k seems a very arbitrary cut off point to me. Especially for those of us who live in London. 


NIALL: Unfortunately that is the case as it stands. I could accept a cap at £50k but a direct exclusion seems harsh if you are on £50,001.

I was advised to create a small Ltd company from my freelance journo work as that protects you from personal liability if you ever get sued or taken to court etc. Bog standard, thousands of us do that.

NIALL: See earlier comments on Job Retention Scheme. A further consideration may be a potential claw back of Corporation Tax paid in earlier years if the Company reports a loss. This is Loss Carry Back claim. It’s probably best a specialist tax advisor handles it but first point of call would be to mention this to their Accountant and see if it could be applicable to their circumstances.

Id say over seven years I have averaged £35k before paying taxes and of course I don't enjoy the normal salaries advantages of paid holiday, days off, company pension, health scheme etc

NIALL: See earlier comments on Job Retention Scheme.

In the last three years I have been struggling with issues and have averaged about £10k with he occasional small dividend in region of £2-5K. It is with complete incredulity I read that Sunak thinks we are all on 200k.

NIALL: See earlier comments on Job Retention Scheme.

In the time between losing work and the chancellors announcement, I looked at applying for part time work of which I have been accepted and am due to start next week.

Do you know if I would be able to claim the self employed package and still be able to do the part time work in the meantime upto June?!

NIALL: For this one there are conditions that the trade needs to be continuing (see here: https://www.gov.uk/guidance/claim-a-grant-through-the-coronavirus-covid-19-self-employment-income-support-scheme ) The part time job would be non self employed income so the most likely test is whether the self employed income is still going to remain more than 50% of their income. .

I am classed as freelance that serves a limited company. I have lost all my income and even when we get back to normal as you know will have to fight to get contracts and work. I don't have enough money to live on if I don't get government support.

NIALL: See earlier comments on Job Retention Scheme.

This is the ONLY way I am allowed to work. When I worked at ******, it was the terms of my contract. They wouldn't give me the contract unless I started a limited company. This then continued to be the way at all media companies I have ever worked at. I pay taxes this and in fact I just paid my tax bill and all my VAT.

NIALL: See earlier comments on Job Retention Scheme.

I have no income and no help. I earn less than £50k and like everyone else pay taxes

I know you can get a Business Interruption Loan Scheme but as you said it is a loan, to be paid back, it doesn’t make up for lost income.

NIALL: It’s not clear if you are in same situation as the Owner Directors but see earlier comments on Job Retention Scheme, tax deferral etc as there may be some hope there.

HMRC, the hotline included, believe (but are not sure) you can take on temporary regular work (i.e. through a job agency) until 1 June without losing your eligibility for SEIS (or affecting the size of it). My tax advisor said it should most likely be fine, but mentioned he could only interpret the Chancellor’s scheme as a large chunk of the fine print was missing or left out. It’s nothing major, just something that could become a factor as time goes by.

NIALL: This is similar to one of the questions above re the part time job. The scheme does allow non self employed income as long as the self employed trade will continue as normal other than the effects of the Covid-19 and the non self employed income is less than 50% of total earnings.

A number of us have received an email from HMRC informing them of the new SEISS dispositions. Many others, including me, haven't. I think it is because our tax returns are filed by our accountants, not by ourselves. Am I right or wrong, and what should we do?

NIALL: Yes I would expect that if your accountant is formally registered with HMRC as your agent they may be receiving the correspondence. Also make sure that postal and email addresses on HMRC.gov.uk login is correct.

Q - I'm rather confused about whether or not I am entitled to apply for UK government support. I'm a full-time freelance journalist, working for UK titles and receiving all of my pay in a UK bank account, but after April 2019 I became a tax resident in a EU country.

However, I did submit an 18/19 tax return in the UK - which seems to be a prerequisite when applying for support - while I was still a British tax resident, and am yet to submit a tax return here as the 2019 accounts aren't due until the summer. 

Given the lack of help available in Italy, I would be eager to claim UK support if it's possible, but I'm unsure as to whether I would be able to given my status. 

NIALL - This is a slightly difficult one to answer but this would be my advice. The submission of the 2018-19 tax return is an advantage. I believe that the fact that you are receiving your money in UK, even though now a tax resident in another country, will require you to complete a 2019-20 return in UK.  Given the parameters of the self employed support scheme announced I therefore believe that you could make a claim.  HMRC have advised people not to contact but they will write to them if they are able to claim so first test would be to ask if you have received that yet? If so I would proceed and claim.  If not can you check if HMRC have written to you or check online if you have an account with them at hmrc.gov.uk, and see if a 2019-20 return is expected, and if you have already made a payment on account for that period. Final question is to ask if you have formally notified HMRC of your change in tax residency yet?

Q - I set up my own small company last June (2019). As with many freelancers, working in sport has seen all of my sources of income stop due to Covid 19. 

The only money left in my business to date is to pay for one more pay day at the end of April.

I'm looking to see what I could be eligible for as I'm massively confused about what is on offer.

NIALL: from these points it would appear that the SEISS would not be available - question: have you informed HMRC you are no longer self employed? If not that is an advantage as HMRC may well write and invite you to apply based on previous results.

Q - After the announcement for the self employed last week, I think I would be eligible for the new scheme for those who are classed under self assessment, with profits for 18/19 under £50k - my average over the last 3 years of accounts is under £50k also.

But will HMRC only consider me as a company director now or could I have sneaked in as I paid a tax bill in Jan 2020? The wait until June is excruciating, as you can imagine!

NIALL: I think the key factor is whether the original self employed trade could be classed as continuing. I believe it is but only via the Company so some of the conditions in relation to self employed results for 2019-20 and 20102-21 won't be met. That said HMRC have said they will write to anyone who can apply, and the 3 year history may mean that you get notified as the company results haven't been declared yet. It's somewhat of a grey area and my advice would be to respond to any invitation to apply if and when it is received.

On the company side one area that can be taken advantage of is to defer all taxes (VAT up to 30 June is automatic, monthly Paye and NIC needs to be applied for under this number with HMRC -  0800 0159 559). This will conserve cash.

If there are any customer bills unpaid we can also help get those paid if it is applicable and of interest. 

Q - Could there be scope for a business grant / loan? Is Universal Credit perhaps the only way forward?

NIALL: For a business that started in June 2019 it's not brilliant as the banks are looking for a solid history of trading - normally 2 years or more. That said it is worth an application and I can help advise what you need and would need to prepare. Your business bank would be 1st point for a claim under the Coronavirus Business Interruption Loan Scheme. If that fails I can put it through a broker who has around 100 lenders connected. 

Q - As a company, I obviously only pay myself a small salary under £1000 and the rest in dividends - but as we know when it comes to businesses, dividends are not taken into account when trying to claim 80% from the government... simply, which way do you think I should go?

NIALL: On the wage of £1000 you can easily furlough yourself if the trade is at a standstill. However, only the wage would be applicable, not dividends, so it's a small relief but not ideal.