Clock is ticking to repay coronavirus grants

Self-employed individuals, and employers, have 90 days to inform HMRC if they have over-claimed the Self Employed Income Support Scheme (SEISS) or Coronavirus Job Retention Scheme (CJRS) grants and repay any excess before penalties apply.

Coronavirus Job Retention Scheme

Any incorrect Job Retention Scheme grant claims in which the employer has overclaimed the amount due can be corrected in a later Job Retention Scheme claim. If the employer has submitted their final Job Retention Scheme claim there is a facility to repay HMRC online which has been in place since 26 June.

In addition to incorrect claims arising from errors in calculation or employee eligibility, a Job Retention Scheme grant should be repaid to HMRC if the funds were not used within a reasonable period to reimburse the employer’s costs relating to furloughed employees, such as furloughed wages, employer’s class 1 NIC and employer’s contribution to a workplace pension.

(If the employer has under-claimed the Job Retention Scheme grant, the extra amount of grant due needs to be set-up directly by HMRC, and the employer should not adjust the amount claimed in a later Job Retention Scheme claim.)

Self Employed Income Support Scheme repayments

HMRC guidance says it will work out if the trader is eligible for a Self Employed Income Support Scheme grant and contact them to invite them to apply. However, HMRC can’t check the three current-period conditions for the Self Employed Income Support Scheme grant:

• Whether the trade has been adversely affected by the coronavirus pandemic
• If the individual traded in 2019/20 (if the tax return for that year hasn’t been submitted)
• Whether the trader intends to continue to trade in 2020/21

If any of those conditions are not met and the Self Employed Income Support Scheme grant has been incorrectly claimed, then the trader needs to tell HMRC as soon as possible and repay the overpaid amount.

We cannot tell HMRC about the overclaimed grant on your behalf, as the disclosure must be made using the same government gateway user ID and password that was used to claim the original Self Employed Income Support Scheme grant.

(The value of the Self Employed Income Support Scheme grant is calculated by HMRC, so a valid claim can only be overpaid if HMRC has made an error.)

Notification period

If the taxpayer notifies HMRC by the 90th day after the claim was submitted, or for claims submitted before 22 July 2020, by the 90th day after Finance Act 2020 was passed, no penalty will be imposed. In practice, this gives taxpayers until 20 October 2020 to come clean about any overclaims of Self Employed Income Support Scheme grant, Coronavirus Job Retention Scheme grant or Statutory Sick Pay.

Penalties

If the taxpayer does not repay HMRC the amount of coronavirus support payment overclaimed, HMRC will raise an assessment of tax equals to the overclaim. This assessment can be appealed.

Where the taxpayer fails to notify HMRC of the overclaimed coronavirus support payment within the 90-day period HMRC will impose a penalty in addition to recovering the overclaim. The penalty is calculated at 30% to 100% of the overclaimed amount depending on the circumstances.

A taxpayer who is investigated by HMRC and is found to have incorrectly claimed a Job Retention Scheme or Self Employed Income Support Scheme grant will be required to repay 150% to 200% of those funds.