In April Emma Rawson explained that amending tax returns may mean repaying SEISS grants. HMRC has now provided more details on which amendments need to be reported and how to do this.
For the fourth SEISS grant (SEISS 4) HMRC worked out both eligibility and the amount of grant based on submitted tax returns, and any amendments made to those returns, which were received by 2 March 2021.
If an amendment is made on or after 3 March 2021 to tax returns for any of tax years 2016/17 to 2019/20, the taxpayer must consider whether that amendment has an impact on the amount of the SEISS 4 grant they should have received:
- If, once the amendment is taken into account, the taxpayer would no longer be eligible for the grant, they will need to pay it back in full.
- If the amendment means the taxpayer would have received a lower grant, the taxpayer will need to repay the excess.
In both cases, the taxpayer needs to notify HMRC to make arrangements for payment.
Unfortunately, this treatment of amendments is very much a one-way street – whilst taxpayers need to tell HMRC if an amendment would mean the taxpayer should receive no, or a lower, grant, there is no scope to claim a higher SEISS grant as a result of an amendment submitted on or after 3 March 2021.
What is an amendment?
For the purposes of the SEISS 4 Direction, an ‘amendment to a tax return’ has a fairly wide definition. HMRC says that anything which has the effect of modifying a person’s tax return is a relevant amendment for SEISS purposes.
This means that a requirement to notify and repay can arise where the taxpayer or HMRC amends the tax return. HMRC amendments include those made following a tax enquiry, or corrections of returns made under s9ZB TMA 1970.
By contrast, HMRC have confirmed that where a person’s tax position is instead amended via contract settlements, revenue assessment, raising a charge etc. (such that their tax return is not modified) there won’t be an impact on their SEISS grant.
Which amendments need to be notified to HMRC?
Only SEISS 4 and SEISS 5 grants are affected. There is no requirement to pay back any amounts of grant received under earlier rounds of SEISS, where the rules any tax return amendment made after 26 March 2020 is effectively ignored.
In addition, only certain amendments made to tax returns on or after 3 March 2021 need to be notified to HMRC. You need to check what the impact of that amendment on the SEISS grant will be.
No notification or repayment of the SEISS-4 is needed if:
- the excess SEISS grant to be repaid is £100 or less; or
- the initial amount of the SEISS 4 grant received was £100 or less.
We understand that similar rules will apply for the upcoming fifth SEISS grant (SEISS 5), though that is yet to be confirmed.
Where a taxpayer is genuinely unsure as to whether the amendment needs to be notified, they can fill out the online notification anyway and HMRC will confirm the position.
How to notify
There is a special online form for notifying amendments accessed from this guidance page: telling HMRC and paying back SEISS grants.
This guidance contains links to two separate notification systems, one for telling HMRC about amended returns, and the other for telling HMRC about grants claimed where the taxpayer was ineligible or for making voluntary repayments. In order to ensure that the notification is processed correctly, taxpayers need to ensure they pick the correct link.
No agents allowed
As the notification form is behind the government gateway log-in it must be completed by the taxpayer themselves, and cannot be completed by their tax agent. However, the form is fairly simple. It only requires information such as the grant claim reference(s) and the years for which amendments have been submitted. There is no need to calculate the amount of repayment or provide any figures from the amended return.
After the form has been completed, HMRC will send the taxpayer a letter confirming the amount of SEISS grant that needs to be repaid and how to pay it back.
If a taxpayer files paper returns, then the same rules on notifying amendments apply. However, where they would struggle with using the online notification form, they can call the SEISS helpline for assistance.
The deadline for notifying HMRC of an amendment depends upon when that amendment was made:
- If a return has been amended before claiming a grant, HMRC must be notified within 90 days of receiving the grant.
- If a return has been amended after receiving a grant, HMRC must be notified within 90 days of making the amendment.
If HMRC is not notified, it will write to the taxpayer and look to raise an assessment. Penalties and interest may also apply.
More information on the potential penalties for not notifying an amendment can be found in HMRC’s factsheet CC/FS47. Whilst the position is not entirely clear, this indicates that penalties could be up to 100% of the amount the taxpayer should have paid back where they knew they were not entitled to it.
However, if the taxpayer genuinely didn’t know they had an amount to repay, HMRC will only charge a penalty if they the grant amount has not been repaid by 31 January 2023.
What to do now
There are concerns that the requirement to notify could slip the minds of busy taxpayers. There is no time limit beyond which tax return amendments no longer need to be considered. Changes to returns made some time after claiming a SEISS 4 grant could require a recalculation.
As a tax agent you should ask about SEISS grants whenever you amend a tax return on behalf of a client. Although you may not be able to make the notification on their behalf, clients may need support in working out whether they need to notify and the practicalities of doing so.
Where a taxpayer concludes they don’t need to repay any SEISS grant, perhaps because the impact on their grant would be below £100, it is advisable to keep a record of how they reached that conclusion should HMRC ever come knocking.
Thank you Emma & AccountingWEB