What to do if you claimed your SEISS grant incorrectly….

HMRC announced that the computer system generating the figures of tax payers entitlement to SEISS grants had some glitches and wasn’t 100% accurate.

Where does that leave taxpayers who want their tax affairs in order?

The SEISS grant payment is exactly that a grant, not a loan. In turn the grant payment is subject to tax - the same way your trading income is.

HMRC showed the calculations of how the grants were calculated. Clear guidance was published on how to work out if you should be claiming or not.

For example if you know you haven’t traded during 2019/20 as your trade finished in 2018/19 you will have incorrectly claimed. This also applies to anyone who has incorporated their business (gone Ltd) since 5 April 2018.

What happens if I made a mistake or my intention to trade has changed?

HMRC penalties for incorrect claims can be levied at 100% of the grants! When uncovered by HMRC charge interest and late payment penalties along with a 31 day demand to repay!!

When should you contact HMRC?

This depends on the date you received your grant, so if you received the grant:

• before 22 July 2020 you must tell HMRC on or before 20 October 2020

• on or after 22 July 2020 you must tell HMRC within 90 days of receiving the grant

if you have mistakenly claimed the grant then HMRC may allow repayments up to January 2022, interest and penalty free.

interest is 4% a year. Late payment penalties are 5% on unpaid debts and this is charged twice as a year,

What if don’t contact HMRC by the above deadline?

if HMRC discover you have intentionally claimed incorrectly and not notified them on time then this will be deemed as deliberate and concealed (therefore attracting 100% penalty on top of the grant to repay!).

Any amounts of grants repaid will of course be reflected in next years tax return. The reduced total of the grant is what is subject to tax/national insurance.

How do I include my grant on next years tax return?