Overpaid SEISS Grants

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According to HMRC, a significant part of the self-employment income support scheme grant that taxpayers received should be paid back. Should you be concerned about this, and what should you do if you get a letter?

Recap of SEISS. For tax years 2016/17 to 2019/20, HMRC calculated a person’s eligibility for the fourth and fifth self-employment income support programme (SEISS) grants and the amount of each grant based on the business earnings reported in their tax returns. The calculations were done on 2 March 2021. Subsequent revisions made by the taxpayer or HMRC that modify the amounts on those returns can also affect the eligibility for SEISS payments.

Warning letter. HMRC has identified people whose SEISS grant eligibility has been lowered by more than £100. It is now at the stage of writing to them about it. The letter provides a formal assessment for payback of the excess grant. It also demonstrates how the requested sum was calculated. Note that only the fourth and fifth SEISS grants are impacted by HMRC’s recalculations.

Trap. You must notify HMRC and repay any overpaid SEISS grant if your business’s earnings reported on your tax returns for the years we’ve cited need correction. You should not wait to be contacted by HMRC.

Accepted assessment.  If you accept HMRC’s calculations after receiving a letter, you must pay the requested amount. A payment reference (which begins with an “X”) and directions on how to pay are included in the assessment. Tip. If you need extra time to payphone HMRC on 0300 322 9497 during the 30-day time window.

Trap. If you do not pay the assessment within 30 days, you will be charged a penalty equivalent to 5% of the assessment amount.

Rejection of assessment.  If you disagree with HMRC’s calculations, you have 30 days from the date of the assessment (letter) to file an appeal. The letter also contains information on how to file an appeal. When you file an appeal, you should include an alternative to how HMRC did its calculations.

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