If you applied for and received a grant under the Self-Employment Income Support Scheme (SEISS) that was introduced to support small businesses through the pandemic, and your tax return for 2019-20 doesn’t contain certain vital information, you will soon be receiving a letter from HMRC about what action you need to take. They’re currently reviewing recipients of the SEISS and making sure their tax return confirms their eligibility to keep it, so if there’s anything that raises their interest, they’ll be letting you know – and you may even need to pay back your SEISS. Of course, any Covid Grant you keep is taxable – so you might have a bigger tax bill than you expected… but do you have to pay it all back?
Who was eligible?
To be eligible to claim a grant under the SEISS, individuals had to have been trading as self-employed or in a partnership in 2019/20. They were required to complete an income tax self assessment tax return for that year, which should have been submitted by 31 January 2021.
Incomplete returns
However, HMRC have found that there are businesses who made a claim for one of the first three SEISS grants (which ran from March 2020 to January 2021), but did not submit a 2019/20 return – or the return they did submit did not actually report income from self-employment or a partnership. This would mean they weren’t eligible to claim the grant, so these discrepancies need to be rectified, or they will demand repayment of the SEISS. If you need to make changes to your 2019/20 tax return then the normal deadline for doing this is 31 January 2022.
Other businesses that could be liable for this repayment demand are those that received a grant, and then ceased to trade in 2019/20 – unfortunately, this also makes them ineligible for the grant, and the amount received must be repaid in full.
Repayment demands
The bad news is, if you did receive the grant and you fall into one of the above categories, they’ll be asking you to submit or amend your 2019/20 tax return to include the relevant information, within 30 days of receiving the letter – or you’ll need to repay the grant you received in full. And if the grants were received more than 90 days before you make repayment, there may also be penalty charges attached as well.
Help and Support
Clearly, this could be a very difficult situation if you find yourself in this position. The letter will include FAQs and contact details for the HMRC self assessment helpline, but it also recommends – and so do we – that you get in touch with your tax advisor or accountant for support. We’ll be very happy to talk through your situation, and advise you how best to proceed – so if one of these letters drops onto your doormat, get in touch with us for some help.
