SEISS claimants- are HMRC checking your grants?

There were five SEISS grants available between May 2020 to September 2021, each grant had different eligibility conditions which are detailed in this table on our SEISS webpage. The SEISS grants are taxable and so should be included in your Self Assessment tax return for the correct tax year.

Why have I been contacted?

HMRC are carrying out compliance checks on some individuals who claimed SEISS grants to make sure they met all the eligibility conditions. Some checks have been prompted by information included on the 2020/21 and 2021/22 Self Assessment tax returns or because the 2020/21 tax returns have not been filed yet.

What should I do if I receive a letter from HMRC about my SEISS grant?

It can be worrying to receive a letter from HMRC, but it is important not to ignore it as there are usually strict time-limits to reply.

You should consider the following points:

• Did you claim the SEISS grants? Unfortunately, there have been cases of fraud with the SEISS grants. This is where someone claimed a grant using your personal details without your knowledge. Speak to HMRC as soon as possible if you didn’t claim the grants and so may have been affected by this.
   
• Which SEISS grants are HMRC asking about? It may be the case that HMRC have concerns about a specific SEISS grant only rather than all the grants you have received. The letter should clearly state which grant payments HMRC are asking you about.
   

• Have you filed a Self Assessment tax return for 2020/21 or 2021/22? In most cases the first three SEISS grants should have been included on your 2020/21 tax return. So, if you claimed one of the first three grants and have not yet filed a 2020/21 tax return HMRC will be concerned that you were not trading when you claimed these SEISS grant(s) and so did not meet one of the eligibility requirements.

  If you have filed your 2020/21 and 2021/22 tax returns, HMRC may have questions about information included on your return which could mean you should not have claimed the SEISS grant(s).
   

• Did you meet the eligibility conditions at the point you made the claim for the SEISS grant? The eligibility criteria did differ between the first and second grants, the third grant and the fourth and fifth grant. There was also an additional Financial Impact Declaration test for the fifth grant which affected the amount of grant you could claim. We detail the different eligible criteria in the table on our SEISS webpage.

How do I check I was eligible for the SEISS grant(s)?

Some of the eligibility conditions are easy to check retrospectively, such as were your tax returns filed with HMRC before a specific date. However, there are some eligibility conditions which relied on a judgement call at the point of making each SEISS grant claim, such as the intention to carry on trading, or whether your business was adversely affected during the Coronavirus pandemic.

For example, for the fourth SEISS grant there was a condition that you must ‘intend to continue to carry on a trade in the tax year 2021-22’.

It could be the case that when making a claim for the fourth grant you met all the relevant criteria and had every intention of continuing to trade in 2021/22. Then, say, in June 2021, after you had made the claim and received the fourth SEISS grant, you got offered an employed position ‘out of the blue’. Because of the uncertainty with your own business, you decided to take the job and so ceased trading on a self-employed basis in July 2021. You didn’t claim the fifth SEISS grant.

On your 2021/22 tax return you include the fourth grant correctly as well as stating that you stopped being self-employed in July 2021. Later you receive a letter from HMRC checking you were eligible for the fourth SEISS grant.

In these circumstances you were eligible for the fourth SEISS grant because at the time you made the claim you were intending to continue to carry on trading. What may have changed after you made the claim, such as an unforeseen employment opportunity arising, does not change the position when you made the actual claim.

I think I was eligible to claim the SEISS grant(s)- what should I do?

You must respond to HMRC’s letter by a specific deadline, usually 30 days from the date of the letter.

If you have submitted your tax returns, it may be the case that HMRC ask for more information relating to your SEISS grants. Following on from the example above, this could perhaps be evidence that you had intended to continue trading when you claimed the fourth SEISS grant.

You should respond to HMRC and explain your intentions at the time you made the SEISS grant claim. The intention to carry on trading at the point of claiming the grant may be difficult to demonstrate as some small businesses may only have ‘word-of-mouth’ agreements for future work. However, you may have evidence that you could send to HMRC, such as subscriptions, insurance, equipment, text or email conversations with people about bookings/showing intention to continue trading. If you cannot provide any physical evidence, then our understanding is that HMRC will ask for an explanation and take a pragmatic approach based on the facts of each individual case.

If you think you were entitled to the first three SEISS grants but have yet to file your 2020/21 tax return, then you should contact HMRC to explain this and submit your tax return as soon as possible. You may also have late filing and late payment penalties unless you have a ‘reasonable excuse’ for not filing your return on time.

If you don’t think you can reply to HMRC in the timeframe they are requesting in their letter, you should call HMRC and ask them for a little more time.

If you are on a low income, you may want to contact the tax charity, TaxAid, to help you reply to HMRC.

I now don’t think I should have claimed the SEISS grant(s) – what should I do?

If you claimed a grant and now realise you shouldn’t have done, then you need to repay the SEISS grant. There are various ways you can do this, and there is guidance on our SEISS webpage. If you can’t afford to repay the grant within the specified time limit, then you should contact HMRC and ask if you can make a ‘time to pay’ arrangement to repay the grant in instalments.

Where can I get more help?

There is information on our website about the SEISS grants and where you need to include them on your tax return.

If you have yet to complete a tax return for the 2020/21 or 2021/22 tax returns, there is information on our self-employment section which may help you. TaxAid, a tax charity, may also be able to help you if you are on a low income.