Unsurprisingly, HMRC has announced how they will be cracking down on fraudulent grant claims. Due to the speed and urgency that claims were made and issued, there are likely to be a number of innocently miscalculated grants and HMRC is requesting that businesses double-check their calculations and notify HMRC within 90 days of receiving any grants, however the penalties will largely be directed at those who deliberately did not comply with the criteria and knowingly submitted fraudulent claims.
This applies to the Coronavirus Job Retention Scheme (CJRS) and the Self Employment Income Support Scheme (SEISS) as well as the Coronavirus Statutory Sick Pay Rebate Scheme and other coronavirus business support grants. In this blog, we have explained how to repay an over claimed CJRS or SEISS grant, when you need to do this and what penalties you may face if you do not comply.
Why would I need to repay part or all of a claim?
Under the CJRS, the main reasons that could trigger a partial or full repayment of a claim include:
- grants not used for the purposes for which they are intended;
- calculation errors
- employees working during periods that they are on furlough.
For those who claimed under the SEISS you will need to repay some or all of your grant if you:
- received more than HMRC said you were entitled to
- your business was not adversely affected
- you did not trade in the tax year 2019 to 2020
- you did not intend to continue to trade in the tax year 2020 to 2021
- you have incorporated your business since 5 April 2019
When do I need to inform HMRC about an overpayment?
If you have claimed too much for a grant and have not repaid it, you must notify HMRC and repay the money by the 20 October 2020 if you received money you’re not entitled to or if your circumstances changed on or before 22 July or within 90 days if you received the money after 22 July.
How do I tell HMRC about an over claimed grant?
CJRS: If you are making another CJRS claim, you can report the overpayment as part of the claims process, and the new claim will be adjusted to count for the overpayment. If you are not making any further claims, you will need to contact HMRC who will then provide a reference number for you to make a repayment. Further guidance can be found here.
SEISS: To repay an over claimed SEISS grant you will need to log into your Government Gateway account and fill out the relevant form with your grant claim reference and Self Assessment Unique Taxpayer Reference (UTR) number. Once you have filled this form out, HMRC will give you the details of where to repay the funds.
What penalty could I face if I do not notify HMRC?
For an over claimed CJRS payment that is not paid back within the notification period, you may have to pay a penalty of up to 100% of the amount of the CJRS grant that you were not entitled to receive or keep. HMRC has been very clear that the onus is on the taxpayer to determine if they received an incorrect grant amount.
If you received an overpayment under the SEISS, the penalty will depend on whether you knowingly over claimed or not. If you knowingly applied and received a grant whilst being ineligible, the penalty will be based on the amount you were not entitled to receive along with other factors. If you honestly believed you were eligible, and you later realised this was not the case, HMRC will only penalise you if you have not repaid the grant by 31 January 2022.