As the Self-employment Income Support Scheme comes to a close, HMRC will continue to rigorously check claims for the most recent SEISS grants.
It is always advisable to approach HMRC with a disclosure, rather than wait for HMRC to discover potential problems.
Genuine mistakes in SEISS claims have been made over the last year and HMRC do recognise this. The rules have changed frequently and, in the very early stages of the rollout, HMRC took a fairly broad approach to what it meant for a business to be ‘adversely affected’.
We recommend you check back over claims now, to be sure that you have evidence in place to support your claim, and that you are confident that you met the eligibility criteria under each successive phase.
It’s important to note the differences in the rules for SEISS 1 and 2 – for which a business had to be adversely affected and also within a particular timeframe – and SEISS 3, 4 and 5, where eligibility was more precisely defined in terms of reduced activity, capacity or demand.
We advise that you review your claim before submitting your 2020/21 tax return. SEISS grant amounts will be entered on the tax return, and submission of the return constitutes your acceptance that the figures are accurate.
Repaying SEISS grants
In some instances, the whole or part of the SEISS grant would need to be repaid. This could happen where a claim did not fit the criteria for a particular phase of SEISS. For example, if a claimant did not intend to continue trading or a business had been incorporated before an SEISS claim was made, it would be invalid.
For SEISS 4 and 5: any amendments to the tax returns which HMRC has used to calculate your grant, made on or after 3 March 2021, are included on the list of circumstances to monitor. If an amendment changes eligibility for SEISS – resulting in less or no SEISS payment – it is your responsibility to notify HMRC of this. There is a different route to notify and repay in these circumstances and we can advise on this. (Note: if the amendment results in a reduction of £100 or less, you do not need to notify HMRC and can ignore this amount).
Time limits for notifying HMRC
There are time limits for alerting HMRC to potential problems and for making repayments. Most importantly, you must notify HMRC within 90 days of receiving a grant to which you think you may not be entitled. Once notified, HMRC is likely to be open to arranging time to make repayment. We can guide you on the procedure for this.
HMRC penalties for incorrect SEISS claims
HMRC also has the power to charge penalties in respect of incorrect SEISS claims. These could apply where someone fails to tell HMRC that they claimed a grant to which they knew they were not entitled. Penalties should not apply in cases where the claimant did not know they were ineligible for the grant, as long as they repay the grant by 31 January 2022 (or by 31 January 2023 for SEISS 4 and 5). Where penalties do apply, the penalty may be up to 100% of the SEISS grant overclaimed.
Finally, just as some major employers have voluntarily repaid furlough monies, it’s possible to voluntarily repay some or all of an SEISS grant at any time. Please get in touch for advice on how to do this.
Claiming SEISS grant 5
A fifth and final SEISS grant is available to those businesses that have been impacted by coronavirus (COVID-19) between 1 May 2021 and 30 September 2021. There are additional requirements in terms of the information you will need to provide when claiming. Please contact us for help preparing the relevant figures for your claim.
Read the full, up-to-date SEISS guidance here.
Image credit: Howard Lake on Flickr