SEISS claimants – have you received a letter from HMRC?

Over the next few months, HM Revenue & Customs (HMRC) are sending letters to around 50,000 individuals who claimed the fourth and/or fifth SEISS grants, but who have either:

• not filed a Self Assessment tax return for 2020/21; or
• filed the return but did not include self-employment pages.

This is so HMRC can work out if claimants were trading in 2020/21. This article explains what you should do if you receive a letter from HMRC about the fourth and/or fifth SEISS grant(s).

What should I do if I receive a letter?

Do not ignore the letter. You should respond to HMRC within the timescale set by HMRC – this is normally 30 days, but some letters issued in December will have a timescale of 40 days.

HMRC are trying to check that you were eligible to claim the fourth and/or fifth SEISS grants. As a result of this letter, if you were trading in 2020/21 you may need to:

• register for Self Assessment, if you are not already registered;

• complete and submit a Self Assessment tax return for the tax year 2020/21, including the self-employment pages or partnership pages; or

• if you have already submitted your tax return for 2020/21, amend it to include the self-employment or partnership pages.

If you were not trading in 2020/21, you will need to tell HMRC and repay your fourth and/or fifth SEISS grant.

If you were trading in 2020/21, and believe you were eligible for the fourth and/or fifth grants, you should contact HMRC if you think you did not need to complete a Self Assessment tax return. The letter indicates that you should contact HMRC’s compliance helpline on 0300 322 9430 and choose option 2. See below for more information on why you might not need to submit a tax return.

What were the eligibility conditions?

For the fourth and fifth SEISS grants, the eligibility conditions were:

• you traded as self-employed or in a partnership in the tax years 2019/20, 2020/21 and intended to continue trading in 2021/22 at the time you claimed the grant;

• you submitted your 2019/20 tax return on or before 2 March 2021;

• you met the profits test; and

• your business was adversely affected.

The letters are aimed at helping HMRC work out if you were trading in the tax year 2020/21.

Do I need to complete a tax return for 2020/21?

If you were trading as self-employed or in a partnership during 2020/21, you probably need to complete and submit a Self Assessment tax return for 2020/21, if you have not already done so.

You should check that you are registered for Self Assessment and registered as self-employed.

You should then complete and submit your tax return for 2020/21. If you claimed any of the first three SEISS grants, remember that they are taxable and you must include them on your 2020/21 tax return (there is a different reporting/tax year treatment for some partners). We explain how you do this at SEISS: where do I include the grants on my tax return?.

There are some circumstances where you may not need to complete a tax return for 2020/21, even if you were trading. This could be the case if your total (gross) trading income in the basis period for 2020/21 was £1,000 or less and was covered by the trading allowance. However, if you claimed an earlier SEISS grant, that would need to be reported on the 2020/21 tax return, so you would need to complete and submit a tax return for 2020/21.

What if I completed a tax return but not the self-employment pages?

If you were trading as self-employed or in a partnership during 2020/21, you may need to amend your tax return for 2020/21 if you have not included your trading income in the self-employment or the partnership pages.

If you claimed any of the first three SEISS grants, remember that they are taxable. You must include them on your 2020/21 tax return (there is a different reporting/tax year treatment for some partners). We explain how you do this at SEISS: where do I include the grants on my tax return?.

There are some circumstances where you may not need to complete the self-employment or partnership pages for 2020/21, even if you were trading. This could be the case if your total (gross) trading income in the basis period for 2020/21 was £1,000 or less and was covered by the trading allowance. However, if you claimed an earlier SEISS grant, that would need to be reported on the 2020/21 tax return (there is a different reporting/tax year treatment for some partners), so you would need to complete and submit a tax return for 2020/21.

What if I completed a tax return for 2020/21?

We are aware that there has been a delay processing some 2020/21 tax returns. If you have submitted your Self Assessment tax return, including the self-employment or partnership pages, you should contact HMRC. The letter indicates that you should contact HMRC’s compliance helpline on 0300 322 9430 and choose option 2.

What do I do if I was not eligible for the grant?

If you have checked the eligibility conditions, and now think that you were not eligible for the fourth and/or fifth SEISS grant, you need to tell HMRC and repay the SEISS grant(s) that you received.

This will be the case if you did not trade at all during 2020/21.

How do I repay the SEISS grant?

You should read the guidance and complete the online form on GOV.UK. There is also guidance on the LITRG website. 

If you cannot complete the online form, contact HMRC using their SEISS helpline.

Will I have to pay penalties and interest?

If you need to submit your Self Assessment tax return for 2020/21 and have not done so, HMRC will normally charge a penalty for late filing. The 2020/21 tax return was due by 31 January 2022, if filing online. HMRC will not charge a penalty if you have a reasonable excuse for filing late and you file the return as soon as the reasonable excuse ends.

If you have already submitted your Self Assessment tax return for 2020/21, but need to amend it, for example, to include your trading income, HMRC say in the letter that they will not charge you a penalty. You normally have until 31 January 2023 to amend the tax return for 2020/21.

If you received a SEISS grant but were not eligible, HMRC may charge you a penalty.

What if I cannot repay the grant?

If you have to repay the fourth and / or fifth grant, but cannot afford to pay it all in one payment, contact HMRC. You can ask HMRC about setting up a Time to Pay arrangement. If HMRC agree to offer you Time to Pay, this will spread the payments of tax (and interest) that you owe over several months.

Where can I find more information or help?

You can find more information about tax penalties on our website.

You can find more information about what to do if you cannot pay your tax bill on our website.

If you are unsure of your tax position, you should seek independent advice. If you can afford to pay a professional tax adviser, you can find more information on how to find one on our website.

If you are on a low income and cannot afford to pay for a professional tax adviser, you should contact the tax charity TaxAid, who may be able to assist you.

If you need help completing your 2020/21 tax return then our self-employment guide has lots of information.

If your health or personal circumstances mean that you find it difficult to deal with your tax position, you can contact HMRC.