Freelancers and small business owners could receive a letter from HMRC identifying them as taxpayers who must repay all or part of their fourth or fifth self-employment income support scheme (SEISS) grant following a tax return amendment.
HMRC is also checking whether any amendment means that the taxpayer is entitled to the lower level (30%) rather than the higher level (80%) fifth grant, the ICAEW has reported.
How are SEISS grants calculated?
According to the ICAEW, when calculating the fourth and fifth SEISS grants HMRC based its calculations on the tax return data for 2016/17 to 2019/20 held in its systems on 2 March 2021. All 2016/17 to 2019/20 tax returns filed by 2 March 2021 were taken into account, said the ICAEW, as were any amendments made by that date.
Amendments to tax returns for any of the relevant tax years made after 2 March 2021 which would reduce the amount of the grant by more than £100, or would cause the taxpayer to be no longer be eligible, must be notified to HMRC and the appropriate amount of grant repaid.
ICAEW Insights
Amendments include HMRC corrections, taxpayer amendments and HMRC amendments made as a result of an enquiry. Contract settlements, revenue assessments or charges raised are not included as these are considered not to modify the tax return.
The tax body said that entitlement to the first three SEISS grants is not affected by subsequent amendments to tax returns.
What should you do if you receive a letter?
Each letter includes a formal assessment and details of how the amount due has been calculated. Should the taxpayer accept the assessment, they should pay following the instructions on gov.uk and quote the reference number on the assessment which starts with the letter X.
What should you do if you can’t afford the repayment right now?
If the taxpayer cannot afford to make immediate payment, ICAEW said that they should phone HMRC on 0300 322 9497 to make a time to pay arrangement.
Is there a SEISS late repayment fee?
A 5% late payment penalty will apply if payment is not made within 30 days of the due date shown on the assessment, or a time to pay arrangement is not set up by that date. Interest will be applied to any amounts unpaid by 31 January 2023.
If the taxpayer does not accept the assessment an appeal should be submitted in writing within 30 days of the date of the letter.
Further information is available on Tell HMRC and pay back a Self-Employment Income Support Scheme grant and HMRC can be contacted on 0800 024 1222.
The ICAEW report in full can be read here.