HMRC has outlined the penalty regime relating to the self-employment income support scheme (SEISS), with harsh fines for those found to have abused the scheme.
For anyone found to have abused the scheme, penalties can be charged up to 100% on the amount of SEISS grant that was overpaid. However, there is a fairly long period for repayment, so if overpayments are settled by the end of January 2022, fines will not be enforced.
When deciding the amount of any penalty, HMRC will consider whether the taxpayer knew they were entitled to the SEISS grant when they received it, and when it became repayable or chargeable to tax because the individual’s circumstances changed.
HMRC guidance states: ‘If you knew you were not entitled to your grant and did not tell us in the notification period, the law treats your failure as deliberate and concealed. This means we can charge a penalty of up to 100% on the amount of the SEISS grant that you were not entitled to receive or keep.
‘If you did not know you were not entitled to your grant when you received it, we will only charge you a penalty if you have not repaid the grant by 31 January 2022.’
An overpayment of SEISS grant includes any amount of grant which the self-employed individual was not entitled to receive or was more than the amount HMRC said the applicant was entitled to when the claim was made.
Overpayments must be notified to HMRC within 90 days of receipt of an SEISS grant.
HMRC is also warning taxpayers to be careful when making SEISS claims as there are several scams circulating with fraudsters trying to deceive the self-employed into making spurious claims, using emails and text messages. In many cases the emails and text messages initially look legitimate, although they frequently feature spelling mistakes and grammatical errors. It is important not to click any links before checking the authenticity of the message.
In the tax authority’s scam update, it stated that it was ‘aware of a phishing scam campaign telling customers they can claim for the fourth SEISS grant as support during the coronavirus pandemic. Do not reply to the email and do not open any links in the message’.
Any phishing emails or texts should be notified to HMRC so they can investigate the scam.
The penalty regime is set out in HMRC guidance, Compliance checks series – CC/FS47.