Penalties for overclaimed SEISS grants

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Claims for the fourth Self Employed Income Support Scheme (SEISS) can now be made and must be claimed by June 1, 2021.

At the same time, HMRC have issued updated details of penalties that may be imposed on those that have previously claimed too much.

If you have overclaimed a SEISS grant and have not repaid it, you need to notify HMRC within the notification period.

The notification period ends on the latest of:

  • October 20, 2020
  • 90 days after you receive the SEISS grant you’re not entitled to

HMRC may charge you a penalty if you do not tell them within the notification period that you’re chargeable to Income Tax on an overclaimed SEISS grant.

When deciding the amount of any penalty, HMRC take account of whether you knew you were entitled to the SEISS grant:

  • when you received it
  • when it became repayable or chargeable to tax because your circumstances changed

If you knew you were not entitled to your grant and did not tell HMRC within 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.

The penalty can be mitigated if the taxpayer assists HMRC in establishing the facts.

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

Ellis & Co Chartered Accountants and Business Advisers, Chester & Wrexham - 01244 343504, info@ellis-uk.com