While many businesses are seeing a gradual return towards normality and, as much of the government support is set to come to an end, HMRC will begin the process of investigating and challenging Self Employment Income Support grants that they believe to have been claimed incorrectly.
The first two tranches of SEISS Grants were reasonably straightforward. Businesses had to have intended to continue to trade and they must also have been adversely affected by coronavirus.
Being adversely affected could mean being unable to work due to shielding or self-isolating; scaling down of trade or closure of business due to restrictions; staff being unable to work or contracts being cancelled or put on hold.
Where things become more complicated are for claims made for SEISS 3 and SEISS 4.
An additional condition was added to the eligibility criteria, which we blogged about previously, requiring that there was a “significant reduction in trading profits over at least one whole basis (accounting) period”.
While there is no exact definition provided for what is “significant” it is believed based on future criteria that 30% would be acceptable. It must also be due to reduced sales, not simply increased costs.
If you believe you have incorrectly claimed any SEISS grants these can be repaid via your tax return without HMRC applying penalties.
Incorrect claims which are not declared and repaid by 31 January 2022 will be subject to penalties as it will be deemed as a deliberate concealment.
We will of course be on hand to assist clients who wish to review the claims they have made or who require help should HMRC investigate / check their claims.