People who accessed the Government’s Self Employment Income Support Scheme may be hit with five-figure bills when they file their January tax return, an accountant has warned.
Almost three million individuals who were either self-employed sole traders or partners in a partnership had registered for 9.9 million grants by mid-August.
But many may have done so in error – because if their business was not adversely affected by the COVID-19 pandemic, they will have to pay the money back.
Accountant Paul Hornby has warned that many grant recipients face unhappy new years as they realise they may owe HMRC tens of thousands in grant rebates.
He said: “The grants were designed to support businesses that had, or predicted they would be, materially impacted in revenue terms by the COVID-19 pandemic.
“The reality is that many businesses actually thrived during the pandemic and, far from revenues being negatively impacted, they flourished.
“In these instances, the SEISS grants should never have been claimed. The Government’s financial support package has been huge; by far its most significant fiscal intervention since the Second World War.
“Having dished out more than £27bn in support grants, there’s no way they will idly sit back and allow individuals who should never have claimed them to keep the money.
“They will be looking for payback where it is due and my fear is that many people will not realise this.”
The Government launched its Self Employment Income Support Scheme in March 2020, and there have been a total of five rounds of funding made available, with payments stopping at the end of September.
HMRC has already issued guidance to recipients of grants, urging them to assess whether they were actually eligible for them.
In a number of circumstances – for example, a business was not adversely affected or a business claimed the grant but ceased to trade – the grant funds must be repaid.
Tax bosses have already been in touch with grant recipients and demanded they assess whether they need to repay some – or all – of the money they have received. That communication will ramp up in the coming weeks and months as HMRC demands answers.
Paul said: “People will fall into a number of categories here. There will be those who have claimed the grants in the full knowledge they were never eligible. Quite understandably, HMRC is gunning for these people.
“There will be those who claimed the grants in good faith, for it to transpire their business thrived and they did not need them. And there will be individuals who absolutely needed the support of the scheme and it has proven to be a lifeline for them.
“Taking advice from your accountant is the best way forward here. They will help you to make sense of the issue and advise you on what your obligations and next steps should be.”
