[Tax]_
Self_ Employment_ Income_ Support_ Scheme_ Update
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Our latest update looks at the Self Employment Income Support Scheme. HMRC have now confirmed that those individuals who were:
- eligible for the first grant and,
- can confirm to HMRC that their business has been adversely affected on or after 14 July 2020
will be able to make a claim for a second and final grant from 17 August 2020. Those eligible can make a claim for the second grant, even if they did not claim the first grant.
The online service is not available yet. HMRC will contact those individuals eligible for the grant and invite them to make an application.
HMRC will then check and pay the grant within 6 working days. An email will be sent when payment has been made and HMRC have asked that individuals do not chase their grant unless more than 10 days have passed since the claim was made and payment has not been received.
Eligibility will not be affected if business improves or recovers after the second grant claim has been made, but evidence and records must be kept to confirm that business had been adversely affected at the time the claim was made. Please note that HMRC will check claims and take appropriate action to withhold or recover payments found to be dishonest or inaccurate. Any individual who knows they’ve been overpaid or is not eligible for the grant must advise HMRC or risk being charged a penalty.
Any taxpayer who is not eligible to receive the grant or receives more than HMRC advised they were entitled to, must tell HMRC and repay the grant/excess:
- on or before 20 October 2020 (for payments received before 22 July 2020)
- within 90 days of receiving the grant (for payments received on or after 22 July 2020)
Details of how to report errors and overpayments and how to make a voluntary repayment are on HMRC’s website
Failure to notify HMRC as necessary may result in penalties (of up to 100% of the grant amount) being charged. Further details of how penalties will be calculated, when they must be paid and the appeals process can be found here.
Record keeping and reporting
Individuals must retain a copy of all records relating to their grants, in line with normal self-employment record keeping requirements and including:
- amount claimed
- grant claim reference
Evidence must be kept to demonstrate that the business had been adversely affected by coronavirus at the time the claim(s) were made, including:
- business accounts showing a reduction in turnover
- confirmation of any coronavirus-related business loans received
- dates business had to close due to lockdown restrictions
- dates that individuals or their staff were unable to work due to coronavirus symptoms, shielding or caring responsibilities
Both grants will need to be reported:
- on the Self-Assessment tax return for the tax year 2020 to 2021
- as self-employed income for any Universal Credit claims
- as self-employed income for changes to your tax credits claims
The grant should be treated as income received on the day it’s paid for any Universal Credit claims or tax credit changes. The grant does not need to be repaid but will be subject to Income Tax and self-employed National Insurance from the date it is received.
Please contact Mason Bloom for further information.
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