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  • Writer's pictureBrian Pusser

Don't Be Caught Out!

๐—˜๐—บ๐—ฝ๐—น๐—ผ๐˜†๐—บ๐—ฒ๐—ป๐˜ ๐—ฎ๐—น๐—น๐—ผ๐˜„๐—ฎ๐—ป๐—ฐ๐—ฒ ๐˜๐—ฟ๐—ผ๐˜‚๐—ฏ๐—น๐—ฒ

๐—œ๐˜€ ๐˜๐—ฟ๐—ผ๐˜‚๐—ฏ๐—น๐—ฒ ๐—น๐˜‚๐—ฟ๐—ธ๐—ถ๐—ป๐—ด ๐—ถ๐—ป ๐˜†๐—ผ๐˜‚๐—ฟ ๐—ฆ๐—˜๐—œ๐—ฆ๐—ฆ ๐—ฐ๐—น๐—ฎ๐—ถ๐—บ?

HMRC has recently highlighted problems with the Self-Employment Income Support Scheme (SEISS) claims.

Even though it worked out the payments, itโ€™s up to you to spot any problems.

What steps should you be taking to check your claim?

The next step

Penalties for not telling HMRC about Self-Employment Income Support Scheme grant overpayments

๐™๐™š๐™ฅ๐™–๐™ฎ๐™ž๐™ฃ๐™œ ๐™Ž๐™€๐™„๐™Ž๐™Ž ๐™œ๐™ง๐™–๐™ฃ๐™ฉ๐™จ

๐™‹๐™–๐™ฎ๐™ข๐™š๐™ฃ๐™ฉ ๐™™๐™ž๐™›๐™›๐™š๐™ง๐™š๐™ฃ๐™˜๐™š

One problem with the Self-Employment Income Support Scheme (SEISS) is that some people received more than HMRC predicted in its original eligibility statement.

If thatโ€™s the case HMRC expects you to say so without further prompting. Note that while thereโ€™s no official guidance on what will happen where there are minor overpayments, HMRCโ€™s usual approach is not to worry about debts under ยฃ100.

๐˜ผ๐™™๐™ซ๐™š๐™ง๐™จ๐™š๐™ก๐™ฎ ๐™–๐™›๐™›๐™š๐™˜๐™ฉ๐™š๐™™ ๐™—๐™ฎ ๐™˜๐™ค๐™ง๐™ค๐™ฃ๐™–๐™ซ๐™ž๐™ง๐™ช๐™จ

For the first SEISS grant, businesses must have been adversely affected by corona virus in the period to 13 July 2020. For the second grant the same principle applies thereafter. If your business records donโ€™t show this you will have to repay the grant (see the next step).

๐—ง๐—ฟ๐—ฎ๐—ฑ๐—ถ๐—ป๐—ด ๐—ฐ๐—ผ๐—ป๐—ฑ๐—ถ๐˜๐—ถ๐—ผ๐—ป

A basic qualifying condition of the SEISS is that you need to have traded in 2019/20. You must also have intended to continue trading in 2020/21. HMRC didnโ€™t have the data to check this when it processed claims. Obviously, with the benefit of hindsight, youโ€™re now in a position to check.

Tip. If you genuinely meant to carry on trading but corona virus forced you to stop permanently, make sure you can prove your original intention as HMRC is almost sure to ask when it becomes aware of the situation.

๐™„๐™ฃ๐™˜๐™ค๐™ง๐™ฅ๐™ค๐™ง๐™–๐™ฉ๐™ž๐™ค๐™ฃ ๐™ฉ๐™ง๐™–๐™ฅ

Companies arenโ€™t eligible for the SEISS, so if you used to be a sole trader or partnership and transferred your business to a company recently, there could be problems. If you incorporated your business at any time since 5 April 2018 you could have passed initial eligibility conditions but failed the test for self-employed trading income for 2019/20. You should read HMRCโ€™s guidance on this point carefully and take the appropriate action.

๐—”๐—ฐ๐˜๐—ถ๐—ผ๐—ป ๐—ฟ๐—ฒ๐—พ๐˜‚๐—ถ๐—ฟ๐—ฒ๐—ฑ

If you were paid a grant that didnโ€™t meet all the conditions or was excessive for any reason, you must notify HMRC and it will advise if you must repay any of it. Trap. Youโ€™re required to tell HMRC by the later of 20 October 2020 or 90 days after receiving the SEISS payment.


If you donโ€™t notify HMRC within the time limits, HMRC can charge a non-notification penalty. It says โ€œinnocent errors and small mistakesโ€ arenโ€™t its focus but youโ€™re still expected to tell it if you didnโ€™t meet one or more of the SEISS conditions. HMRC makes a distinction between deliberate and careless mistakes, and penalties are worse if youโ€™re in the deliberate category.

For the SEISS, HMRC is modifying the rules for self-assessment penalties but the same basic principles will apply. If it thinks the mistake was deliberate or careless youโ€™ll be fined. But if you genuinely didnโ€™t know you werenโ€™t eligible for a SEISS grant, HMRC will only charge a penalty if you donโ€™t pay it back by 31 January 2022 (see The next step).

SEISS payments can be wrong for several reasons as HMRC made its calculations using limited financial information. Also, it might only now be clear that you did not meet all the conditions, e.g. continuation of your business in 2020/21.

Itโ€™s your responsibility to check these factors and notify HMRC if thereโ€™s a problem. Penalties can apply.



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