COVID-19 update – 5 August – Overclaimed COVID grants

We strongly advise those who have received CJRS or SEISS grants to double-check their entitlement now that the 90-day period to inform HMRC of any overclaimed amount has become law.

The law clearly states the responsibility is on the taxpayer to notify HMRC if they have overclaimed and this has to be done within 90 days of Royal Assent (so by 20 October 2020) or 90 days of receipt of the grant, whichever is the later.

As well as giving HMRC the power to recover grant payment where the recipient was not entitled, the new law enables them to charge penalties as well. These penalties will be based on the usual failure-to-notify penalties with an additional provision which means if the taxpayer knowingly claimed the grant wrongfully, the overpayment must be notified or repayment made in full by the end of the notification period. Any failure arising from this additional provision will be treated as deliberate and concealed.

HMRC has published guidance on how to repay overclaimed CJRS grants and overclaimed SEISS grants, as well as factsheets on how the penalty rules apply for the CJRS and for SEISS grants.

It is important to note that error penalties can also apply if there are mistakes are made when putting the grant figures on tax returns.

Risks affecting SEISS grant entitlement are:

• the trade was not adversely affected by coronavirus
• the trade did not continue in the tax year 2019/20 (e.g., because the business was incorporated)
• there was no intention to continue to trade in the tax year 2020/21.

The main risks affecting CJRS entitlement are:

• grants not used for the purposes for which they are intended
• calculation errors
• employees working during periods that they are on furlough.

Find out more