Penalties for not telling HMRC about SEISS grant over payments

In March 2020, the Chancellor Rishi Sunak announced a support package for those people that are self-employed or a member of a partnership and have lost income due to the COVID-19 crisis. The Self-Employed Income Support Scheme (SEISS) was created.

SEISS have supported millions of self-employed who have been and continue to be unable to work during the coronavirus pandemic. There have been four rounds of grants under the scheme to date and at the Budget in March 2021, it was confirmed that there would be a fifth round of grants later this year.

However, there is growing concern that many people may have wrongly claimed or been overpaid the grants and HMRC have set out clear guidelines in what to do in these circumstances.

If you received a grant but were not eligible for or you’ve been overpaid, find out what penalties you may have to pay if you do not tell HMRC.

What is an overclaimed SEISS grant?

An overclaimed SEISS grant includes any amount of grant which the self-employed person was not entitled to receive; or was more than the amount HMRC said the applicant was entitled to when the claim was made.

This includes where a tax return being amended on or after 3 March 2021 lowers the amount youre eligible for or causes you to be no longer be eligible.

When should I notify HMRC if I’ve received an overpayment of SEISS?

Overpayments must be notified to HMRC within 90 days of receipt of an SEISS grant.

How do I tell HMRC about a grant overclaim?

HMRC understands that mistakes can be made or circumstances change, so they are making it as easy as possible to pay back any amounts of SEISS grants you’ve received that you were not entitled to.

If you received too much because you made an error in a claim, you must pay this back.

If you’re not eligible and have to pay the grant back, you must tell HMRC within 90 days of receiving the grant.

If your tax return was amended on or after 3 March 2021

If your tax return has been amended BEFORE claiming your fourth grant, you must tell HMRC within 90 days after receiving your grant.

If your tax return has been amended AFTER receiving your fourth grant, you must tell HMRC within 90 days after the amendment.

If you know that the grant amount is lowered by £100 or less, then you DO NOT need to tell HMRC.

How do I tell HMRC and pay money back?

The process is different depending on why you need to pay the grant back.

You can find out how to tell HMRC about an overpayment or if you are no longer eligible here.

What are the penalties if I don’t notify HMRC?

If you do not tell HMRC within 90 days of your amendment, or payment of the grant, you may also have to pay a penalty.

HMRC guidance clearly states that if you knew you were not entitled to your grant and did not tell HMRC in the notification period, the law treats your failure as deliberate and concealed. This means HMRC can charge a penalty of up to 100% on the amount of the SEISS grant that you were not entitled to receive or keep.

How will HMRC calculate SEISS penalties?

When deciding the amount of any penalty, HMRC will consider whether the taxpayer knew they were entitled to the SEISS grant, when they received it and when it became repayable or chargeable to tax because the individuals circumstances changed.

To recover the overpaid amount, HMRC can make a tax assessment. They’ll assess you for the amount that you have been overpaid. If they make an assessment, they’ll write to you about it. You must pay any amount they assess within 30 days of the assessment. They will charge interest on any late payments. They may also charge you late payment penalties if the amount remains unpaid after the due date.

What happens if I didn’t know I wasn’t entitled to the grant?

If you didn’t know you were not entitled to the grant when you received it, HMRC will only charge you a penalty if you have not repaid the grant by 31 January 2022.

How do I appeal?

If HMRC make an assessment to recover a grant which you were not entitled to or were overpaid, they will write to you and explain how they arrived at the decision.

If you do not agree with the decision or the amount due, you can appeal within 30 days from the date the notification was issued to you.

What can I do next to get help?

With the fourth SEISS grants now having been claimed and paid and the fifth SEISS grant opening soon, it’s imperative you understand if you have claimed the right amount. If your circumstances have changed or you’re worried about the amount you received for any reason, speak to your accountant or our experts at DNS today.

Contact us today for help and advice on claiming SEISS grants.

Also See: SEIS and EIS Investment Scheme for UK Startups

About the author

Sumit Agarwal
Sumit Agarwal (ACMA ACA India), the Managing partner of dns accountants is a highly respected accountant with expertise in helping owner-managed businesses.