Self-employed workers claiming government support during the Covid pandemic have been issued a stark warning by the tax authorities.
Nearly three million freelancers whose livelihood was hit by the coronavirus outbreak have claimed more than £25 billion through the UK's Self-Employment Income Support Scheme (SEISS) grant.
But now HM Revenue and Customs (HMRC) has issued new guidance for those claiming the fifth and final grant up to the end of September - warning that some or all of it may need to be paid back - or they may face a penalty.
READ MORE - Edinburgh city centre shops 'under siege from vandals' at tourist hotspot
More than nine million grants have been claimed by self-employed workers across the UK since the scheme launched in May last year, latest figures reveal.
The Record reports how a new update on GOV.UK advises: “If you've received a letter from HMRC you may need to pay back some or all of the grant.”
What you need to know about SEISS repayments
The guidance states that you must tell HMRC if, when you made the claim, you were not eligible for the grant.
For example:
- for the first or second grant, your business was not adversely affected
- for the third, fourth or fifth grant, your business had not been impacted by reduced activity, capacity or demand or inability to trade in the relevant periods
- you did not intend to continue to trade
- you have incorporated your business
You must also tell HMRC if you:
- received more than HMRC said you were entitled to
- amended any of your tax returns on or after March 3, 2021 in a way which means you’re no longer eligible or are entitled to a lower fourth or fifth grant than you received
- made a mistake reporting your turnover in your claim for the fifth grant which means you are entitled to a lower grant than you received
- have received a letter from HMRC that says you need to pay back some or all of a grant
When you must tell HMRC
In most cases, if you’re not eligible and have to pay the grant back, you must tell HMRC within 90 days of receiving the payment.
For the fourth and fifth grants the rules for when to tell HMRC are different if amending your return affects your eligibility or grant amount.
If your return has been amended
You must tell HMRC if there is an amendment to any of your tax returns on or after March 3, 2021 which either:
- lowers the amount of fourth or fifth grant you were eligible for
- causes you to no longer be eligible for the fourth or fifth grant
If your return has been amended before claiming your grant, you must tell HMRC.
If your return has been amended after receiving your grant, you must tell HMRC within 90 days of making the amendment.
If you do not tell HMRC, they will write to you to recover the grant and you may also have to pay a penalty - find more information on how they will recover your overpaid grant on GOV.UK here.
You do not have to tell HMRC if the grant amount:
- you are eligible for has lowered by £100 or less
- was £100 or less
If you are not sure, you should still tell HMRC about the amendment using the online form here.
If you made a mistake when reporting your turnover
You need to tell HMRC if you:
- made a mistake reporting your turnover in your claim which means you are entitled to a lower grant than you received
- later realise you should have reported a different turnover figure in your claim which means you are entitled to a lower grant than you received
Voluntary repayments
You can also tell HMRC if you want to voluntarily pay back some or all of the grant you received - you can do this at any time.
To do this, you will need your:
- Government Gateway user ID and password that you used when you made your claim
- grant claim reference - you’ll find this in the online service or on your copy of the grant claim
- Self Assessment Unique Taxpayer Reference (UTR) number - if you do not have this find out how to get your lost UTR here
Check how to tell HMRC and pay money back
The process is different depending on why you need to pay the grant back, however, there is a service available on the GOV.UK website which allows you to check whether you need to tell HMRC and pay back some or all of a grant.
Find out more on the GOV.UK website here.
