Over Claimed Your COVID Grant? It’s Time to Check!

The COVID-19 pandemic has required the UK government to offer financial support to businesses, the like of which we’ve never seen before.

From the furlough scheme to the self-employed income support scheme (SEISS), the goal has been to keep businesses and sole traders afloat during a nationwide lockdown.

As you’d expect, the claims process – while largely successful for many – has also caused confusion, disappointment and, in some cases, claims which shouldn’t have been made in the first place.

How has this happened – am I at fault?

If we take the SEISS as an example, it’s possible that a proportion of taxpayers felt as though they should claim, regardless of the pandemic’s impact on their business.

The guidance from the government could certainly have been clearer, and if you made an assumption that you could claim on SEISS due to any impact on your business (no matter how minor), you certainly weren’t alone.

Unfortunately, you may not have been eligible.

Claiming for business support is something you may never have expected to do, therefore it’d be rather unfair to suggest that anyone who has over claimed based on an assumption has somehow ‘gamed’ the system. It was an easy mistake to make.

However, you do need to check to see if you’ve over claimed to avoid penalties.

The Finance Act 2020: what’s it all about?

The government has recently passed legislation as part of the Finance Act 2020 which gives people 90 days’ notice to notify HMRC of any over claimed COVID grants.

This means you’ve got until 20th October to double check your entitlement for SEISS or Coronavirus Job Retention Scheme (CJRS) grants. This also applies to grants issued under the Coronavirus Statutory Sick Pay Rebate Scheme and coronavirus business support programs.

Penalties will be based on the usual failure-to-notify penalties with additional provision for those who knew they weren’t entitled to a grant but still claimed. In these cases, the penalty for non-repayment could be as much as the entire amount over claimed.

HMRC have created web pages to help you through this process and to gain a better understanding of how it might impact you:

If you’ve claimed too much or not enough from the Coronavirus Job Retention Scheme

Tell HMRC and pay the Self-Employment Income Support Scheme grant back

Penalties for not telling HMRC about Coronavirus Job Retention Scheme grant overpayments – CC/FS48

Penalties for not telling HMRC about Self-Employment Income Support Scheme grant overpayments – CC/FS47

We used the furlough scheme – how do we know if we’ve over claimed?

The government has published a detailed guide for grants and their entitlement under CJRS.

If you claimed for furlough payments, these are the key risks which may have affected your eligibility:

a calculation error;
grants which weren’t used for the purpose for which they were intended; and
employees who worked during their furlough period (including volunteering).

HMRC has made it clear that they understand mistakes happen – particularly under these highly unusual circumstances. Their intention is therefore to make it as easy as possible to repay the grant- and they won’t charge penalties if the error was innocent.

The government also revealed that they won’t be actively looking for innocent errors during their compliance approach, which leaves the onus very much on businesses to do the checking.

I’m self-employed – how do I know if I’ve over claimed?

If you received a grant under SEISS, these are the risks affecting entitlement:

your trade wasn’t adversely affected by coronavirus;
your trade didn’t continue into the 2019/20 tax year; or
you had no intention to continue trading into the 2020/21 tax year.

Just like the CJRS, the government won’t be proactively looking for small and innocent errors made by self-employed workers. Equally, if you have health or personal circumstances which will make dealing with the matter challenging, they’re also offering plenty of support.

Thankfully, there’s some time. If you made an innocent error, there’ll be no penalty if you repay the grant by January 2022.