SEISS Confusion? "Claw back" grants?

jlg1

Hi everyone,

Thanks for any advice on this.

My income was down this past tax year and I received 2 grants during the tax year 2021 to 2022 of £1809.00

My accountant has mentioned that HMRC might have an issue with this and they will not be able to "claw back" the SEISS grants "The main point of contention will be a fall due to demand from Covid 19 of your income hence no likelihood of a claw back of Covid 19 grants received".  He said they can reference this to the Gross income 5th Aprill 2020.

I wasnt aware that HMRC would be "clawing anything back"..?  Have I missed something?

Thanks for any help with this.

Jeremy535897

HMRC can only claw back grants if, at the time the claim was made, you didn't meet all of the criteria.

jlg1

Jeremy535897 said:

HMRC can only claw back grants if, at the time the claim was made, you didn't meet all of the criteria.

Hi thanks - thats sort of what I thought.   At the time they contacted me and I was told everything was ok to apply for each of the last last 2 grants.  There were no problems. I'm not happy about the wording of the letetr from the accountant as its a bit misleading.  If HMRC had an issue with the grants surely they would have let me know? 

My student intake dropped when I was focrced online (private music tutor) and that reflects in the accounts, so I did need the grant to cover.   Weird - there were no issues last year at all..?

Thanks for the reply...:)

Jeremy535897

The first grants were much easier to claim. Even buying some PPE sufficed to enable a claim. Most of the people whose earlier grants were clawed back are the ones who said they had traded throughout 2019/20 when claiming, and then filed a tax return showing they ceased to trade in the year! The later grants had more strict conditions, requiring an estimate of future earnings, but HMRC do not have a right to claw grants back just because an expected fall in business did not actually happen. Whether HMRC choose to ask claimants to produce evidence to support those estimates is something that we will have to wait to see, but it does not sound as if that is your situation.

jlg1

Jeremy535897 said:

The first grants were much easier to claim. Even buying some PPE sufficed to enable a claim. Most of the people whose earlier grants were clawed back are the ones who said they had traded throughout 2019/20 when claiming, and then filed a tax return showing they ceased to trade in the year! The later grants had more strict conditions, requiring an estimate of future earnings, but HMRC do not have a right to claw grants back just because an expected fall in business did not actually happen. Whether HMRC choose to ask claimants to produce evidence to support those estimates is something that we will have to wait to see, but it does not sound as if that is your situation.

Thanks Jeremy,

Ah right - Yes I definitely traded but had much lower students at the time.   Also the fall in business did happen for myself as again the following year things were a bit tight at times.

Another confusing thing Ive just noticed my accounts (draft version) from the accountant doesnt include the 4th and 5th grant for 2021 to 2022..?  These were paid May and August 2021. The previous years have the 1st three grants on there paid 2 in June and 1 in December 2020.

So is the 4th and 5th not taxable as well..?  This is resulting in my income looking much lower than it was if the 4th and 5th are added to my actual physical earnings..?

Is this possibly an oversight by my accountant or should these not have been listed as income for 2021/2022..?

Ive noticed he's also more than doubled his charges this year for the work.

Bit confused as to whether to mention the 2 SEISS 2021 grants or not  - meeting with him tomorrow...

Thanks for your replies so far...

Jeremy535897

The SEISS grants have to be shown separately on the tax return, so it makes sense to show them separately in the accounts, if for no other reason than to minimise the chances of a mistake. If they were shown separately last year, you must ask your accountant where they are this year. Including them in normal trading income and then doing this on the tax return will probably lead to HMRC amending your return to include them in the correct box, without reducing trading income, thus double counting them.

A lot of accountants did extra work during the pandemic, but did not feel that it was appropriate to charge. That doesn't mean to say it is OK to charge in the following year. Ask your accountant why the fees have more than doubled.

jlg1

Jeremy535897 said:

The SEISS grants have to be shown separately on the tax return, so it makes sense to show them separately in the accounts, if for no other reason than to minimise the chances of a mistake. If they were shown separately last year, you must ask your accountant where they are this year. Including them in normal trading income and then doing this on the tax return will probably lead to HMRC amending your return to include them in the correct box, without reducing trading income, thus double counting them.

A lot of accountants did extra work during the pandemic, but did not feel that it was appropriate to charge. That doesn't mean to say it is OK to charge in the following year. Ask your accountant why the fees have more than doubled.

Thanks Jeremy for your reply.

Yes the 3 grants were listed seperately under my income - the 2 payemnts for 2021 are missing off this years for some reason.  I did my accounts accounting for these but it seems the accountant has only taken my income from lessons and not added the 2 grants - this will greatly reduce my income though affecting tax credits as well probably. 

Surely when th 2 payments were on my work bank statements which were handed in as well, they couldnt have missed these...?

As regards charges. in 2020 it was the same price as this year but 2021 was over £200 less - not sure why he has done this but I'll ask him anyway.

Thanks for your reply...

Moneysavingexpertmember777

Hi All, I'm hoping someone can help me and not really sure where to start in terms of which forum is best....

My partner, a self employed, sole trader has just had an email back from her accountant with regards to the 2021/22 tax year. He has mentioned that she has to pay both the 4th and 5th SEISS grant back in full as "she has earned more money in that tax year then she did before COVID so HMRC want it back"...

There are so many factors as to why this was including her now working from her own salon instead of being mobile and had built up more of a client base and in any case surely the whole point of businesses are to try and grow, although the government are trying to impede this... Can any one help and shine a light on if this is correct. 

NB: a more successful trading year was reporting 21k GP as opposed to 17k pre Covid.  

Thank you

Jeremy535897

The first question to ask the accountant is whether HMRC are saying the grants have to be paid back, or whether the accountant is saying that. Accountants are being put under pressure by their professional bodies to identify incorrectly claimed grants, but merely making more money than before COVID is not something which obliges the return of a grant. Both SEISS 4 and 5 required tricky estimates of future income, and unless the method of calculation did not follow the rules, a better outcome than expected is not a reason to repay.