Self-employed people, and employers, have 90 days to inform HMRC that they have over-claimed the SEISS or CJRS repay any excess before fines apply.
Any incorrect CJRS grant claims in which the employer has overclaimed the amount due can be amended in a later CJRS claim. If the employer has submitted their final CJRS claim, there is a facility to repay HMRC online which has been in place since 26 June.
If the employer has under-claimed the CJRS grant, the extra amount of grant due needs to be set-up directly by HMRC, and the employer should not adjust the amount claimed in a later CJRS claim.
A CJRS grant should be repaid to HMRC if the funds were not used within a reasonable period to reimburse the employer’s costs relating to furloughed employees, such as furloughed wages, employer’s class 1 NIC and employer’s contribution to a workplace pension.
The self-employed income support scheme (SEISS) has always lagged behind the furlough grant scheme (CJRS), and the applications for the second SEISS grants will open on 17 August.
HMRC calculates the SEISS grant, so a valid claim can only be slightly overpaid if HMRC has made an error.
The HMRC guidance says it will work out if the trader is eligible for a SEISS grant and contact them to invite them the trader to apply. However, HMRC can’t check the three current-period conditions for the SEISS grant:
➡️ Whether the trade has been adversely affected by the coronavirus pandemic
➡️ If the individual traded in 2019/20 (if the tax return for that year hasn’t been submitted)
➡️ Whether the trader intends to continue to trade in 2020/21
If any of those conditions are not met the SEISS grant has been incorrectly claimed, the trader needs to tell HMRC as soon as possible and repay the overpaid amount.
When the draft legislation was proposed for taxing the coronavirus support payments (SEISS, CJRS and SSP reclaim), it included a 30-day period for taxpayers to notify HMRC of corrections needed to any of those claims. After significantly lobbying by the professional bodies, this notification period was extended to 90 days.
If the taxpayer notifies HMRC by the 90th day after the claim was submitted, or for claims submitted before 22 July 2020, by the 90th day after FA 2020 was passed, no penalty will be imposed. This gives taxpayers until 20 October 2020 to come clean about any overclaims of SEISS, CJRS or SSP.
If the taxpayer does not repay HMRC the amount of coronavirus support payment overclaimed, HMRC will raise an assessment of tax equals the overclaim. This assessment can be appealed.
Where the taxpayer fails to notify HMRC of the overclaimed coronavirus support payment within the 90 days, HMRC will impose a penalty under the failure to notify rules. The penalty is calculated at 30% to 100% of the overclaimed amount, for voluntary disclosure, but will be set at 50% to 100% of the overclaimed amount for a prompted disclosure.
Thus, a taxpayer who is investigated by HMRC and is found to have incorrectly claimed a CJRS or SEISS grant will be required to repay 150% to 200% of those funds.