With the fourth round of the Self-Employment Income Support Scheme (SEISS) now well underway, HM Revenue & Customs has announced tough new fines for those that abuse the financial support on offer.
The new penalty regime is aimed at those who have overclaimed the SEISS grant, which includes any amount of grant that a self-employed individual was not entitled to receive or was more than the amount HMRC said the applicant was entitled at the time of a claim.
Claimants who receive an overpayment must notify HMRC within 90 days of receipt of an SEISS grant or face a penalty of up to 100 per cent on the amount of the SEISS grant overpaid.
Although overpayments must be reported to HMRC within a short period, individuals are being offered a longer window for repayment, as no fines will be enforced as long as overpayments are settled by the end of January 2022.
When calculating fines, HMRC has said it will take into account whether the taxpayer knew they were entitled to the SEISS grant when they received it, and when it became repayable or chargeable to tax because the individual’s circumstances changed.
The guidance states: “If you knew you were not entitled to your grant and did not tell us in the notification period, the law treats your failure as deliberate and concealed. This means we can charge a penalty of up to 100 per cent on the amount of the SEISS grant that you were not entitled to receive or keep.
“If you did not know you were not entitled to your grant when you received it, we will only charge you a penalty if you have not repaid the grant by 31 January 2022.”
As well as issuing new guidance on SEISS overpayments, HMRC has also issued a warning to claimants to be careful of a growing number of scams.
It is understood that fraudsters are trying to dupe self-employed individuals into making spurious claims, using emails and text messages. Although appearing quite legitimate, they frequently feature spelling mistakes and grammatical errors.
As well as targeting self-employed workers, HMRC has made it clear that it attends to tackle abuse of the furlough scheme as well, as it seeks to recuperate the cost of COVID-19.
HMRC is understood to be reviewing previous Coronavirus Job Retention Scheme claims and investigating businesses that have deliberately or accidentally overclaimed this financial support.
With so many changes to the furlough rules during the last year, it is thought that thousands of businesses could be exposed to an enquiry for errors they made when claiming support.
How we can help
If you have made a claim under the CJRS or SEISS in the last year it is important that you check your records to ensure they were accurate at the time the claim was made.
If you are concerned that you may have received an overpayment, we can help to resolve this issue to ensure you aren’t penalised.
Where you are targeted by HMRC for an enquiry we also offer a comprehensive tax investigation service, which includes a fee protection policy.
This ensures you can access our support and that the costs of defending a claim from HMRC are covered by this policy.
To find out more about our high levels of support, please speak to our experienced team today.