For many people, the Self-Employment Income Support Scheme was a lifeline during the height of the COVID-19 pandemic. In total, there have been five rounds of SEISS grants. However, because the qualifying criteria differed between grants, some people were eligible for some grants and not others. This is likely to mean that some self-employed people have inadvertently claimed grants they weren’t entitled to. If you’ve claimed any of the grants, you may be asking yourself: “Do I have to repay SEISS?”
In this post, we aim to help you answer that question. To do so, we’ll do a quick recap of the qualifying criteria for each SEISS grant. After that, we’ll look at what HMRC advises if you think you need to repay SEISS.
For all five rounds of SEISS, self-employed claimants had to confirm that their business was adversely affected by the pandemic. ‘Adversely affected’ covered a wide range of scenarios. These included being unable to work because of shielding, sick leave or self-isolation, or having care responsibilities because of COVID-19.
Claimants for all grants also had to state that they were suffering from reduced activity, capacity or demand compared with what could reasonably expected.
However, for grants 1 and 2, there was no link between the amount of the grant and the financial loss. So, if you had a slight dip in profits or you’d lost a few clients or customers, you’d be eligible. You can read more about the eligibility criteria for these grants on this page.
For grants 3, 4 and 5, more rigorous eligibility criteria applied. In particular, you had to confirm a reduction in sales compared to forecast. Examples could include fewer sales, fewer clients or customers, cancelled contracts or supply chain disruption. However, you would not be eligible to claim if – for example – you maintained profit levels despite having fewer clients, or you chose not to replace lost contracts.
So, do I have to repay SEISS?
Whether you need to repay SEISS depends on your circumstances. For example, if your turnover increased during one of the qualifying periods, you may need to repay the grant. However, if it increased due to you landing an unforeseen contract that gave you a late boost in profits, then you probably don’t have to make a repayment.
So what does HMRC say about whether you need to repay SEISS? On this guidance page, it tells you that you must tell HMRC if:
- for the first or second grant, your business was not adversely affected
- for the third, fourth or fifth grant, your business had not been impacted by reduced activity, capacity or demand or inability to trade in the relevant periods
- you did not intend to continue to trade
- you’ve incorporated your business
Additionally, if you amended any of your tax returns on or after 3rd March 2021 in such a way that made you ineligible for the 4th or 5th grants, or eligible for a lower grant than your received.
When should I tell HMRC I need to repay SEISS?
If you believe that you may have to repay SEISS, please speak first to your THP account manager. We can help you determine whether repayment is necessary or not.
If you do need to make a repayment, it’s wise to tell HMRC as soon as possible. You should have notified HMRC by 20th October 2020 if you had to repay the first grant. For the second or third grants, you should have notified within 90 days of the grant payment. For the final two grants, you need to have notified within 90 days of the grant payment or any tax return amendment that lowered your grant amount by more than £100.
Luckily, once you have notified HMRC, you don’t have to make the repayment immediately. For the first three grants, repayments are due on 31st January 2022. The remainder are due on 31st January 2023.
As always, if you are a THP client and have any questions or concerns about SEISS, do get in touch. We’re always happy to help.
About Mark Ingle
Owner-manager business specialist, Mark Ingle is key to building relationships with clients at the Chelmsford office. “I like to see clients enterprises grow and succeed.” Mark explains, “The team here has a lot to offer and I can see a lot of new businesses responding to that.”
Having worked for accountancy practices in London and Essex, Mark has worked with a range of companies varying in size. For Mark, THP stands out for its “local firm approach with the resources of a larger practice.”
Although a keen traveller, Mark is focused on giving his clients at THP the highest service, “Right now, I aim to help the clients we have to the best of my ability which will help me attract more of the right clients in the future.”
Mark’s specialist skills:
- Annual and Management Accounts
- Tax and VAT
- Strategy and Business Planning
- Marketing and Sales
- Business Development