𝗘𝗺𝗽𝗹𝗼𝘆𝗺𝗲𝗻𝘁 𝗮𝗹𝗹𝗼𝘄𝗮𝗻𝗰𝗲 𝘁𝗿𝗼𝘂𝗯𝗹𝗲
𝗜𝘀 𝘁𝗿𝗼𝘂𝗯𝗹𝗲 𝗹𝘂𝗿𝗸𝗶𝗻𝗴 𝗶𝗻 𝘆𝗼𝘂𝗿 𝗦𝗘𝗜𝗦𝗦 𝗰𝗹𝗮𝗶𝗺?
HMRC has recently highlighted problems with the Self-Employment Income Support Scheme (SEISS) claims.
Even though it worked out the payments, it’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
𝙍𝙚𝙥𝙖𝙮𝙞𝙣𝙜 𝙎𝙀𝙄𝙎𝙎 𝙜𝙧𝙖𝙣𝙩𝙨
𝙋𝙖𝙮𝙢𝙚𝙣𝙩 𝙙𝙞𝙛𝙛𝙚𝙧𝙚𝙣𝙘𝙚
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 that’s the case HMRC expects you to say so without further prompting. Note that while there’s no official guidance on what will happen where there are minor overpayments, HMRC’s usual approach is not to worry about debts under £100.
𝘼𝙙𝙫𝙚𝙧𝙨𝙚𝙡𝙮 𝙖𝙛𝙛𝙚𝙘𝙩𝙚𝙙 𝙗𝙮 𝙘𝙤𝙧𝙤𝙣𝙖𝙫𝙞𝙧𝙪𝙨
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 don’t show this you will have to repay the grant (see the next step).
𝗧𝗿𝗮𝗱𝗶𝗻𝗴 𝗰𝗼𝗻𝗱𝗶𝘁𝗶𝗼𝗻
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 didn’t have the data to check this when it processed claims. Obviously, with the benefit of hindsight, you’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.
𝙄𝙣𝙘𝙤𝙧𝙥𝙤𝙧𝙖𝙩𝙞𝙤𝙣 𝙩𝙧𝙖𝙥
Companies aren’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 HMRC’s guidance on this point carefully and take the appropriate action.
𝗔𝗰𝘁𝗶𝗼𝗻 𝗿𝗲𝗾𝘂𝗶𝗿𝗲𝗱
If you were paid a grant that didn’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. You’re required to tell HMRC by the later of 20 October 2020 or 90 days after receiving the SEISS payment.
𝙋𝙚𝙣𝙖𝙡𝙩𝙞𝙚𝙨
If you don’t notify HMRC within the time limits, HMRC can charge a non-notification penalty. It says “innocent errors and small mistakes” aren’t its focus but you’re still expected to tell it if you didn’t meet one or more of the SEISS conditions. HMRC makes a distinction between deliberate and careless mistakes, and penalties are worse if you’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 you’ll be fined. But if you genuinely didn’t know you weren’t eligible for a SEISS grant, HMRC will only charge a penalty if you don’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.
It’s your responsibility to check these factors and notify HMRC if there’s a problem. Penalties can apply.