An update from HMRC on the SEISS, information on how to report Covid supports in tax returns and news about reasonable excuse due to Covid-19 feature this month. Updated guidance has also been published on offsetting CJRS over and underclaims.

SEISS update

HMRC sent the below update regarding the Self-Employed Income Support Scheme (“SEISS”).

In the coming weeks HMRC will be writing to everyone who claimed at least one SEISS grant with key information for them to be aware of on how to report SEISS grants correctly on their tax return, and what to do if anything has changed since claiming. This will cover (depending on your client’s circumstances):

A reminder that SEISS grants are taxable:

• Taxpayers will be reminded that their SEISS grants are subject to income tax and National Insurance; and
• Grants received on or before 5 April 2021 should be included in 2020/21 tax returns (online filing deadline 31 January 2022). Grants received on or after 6 April 2021 should be included in 2021/22 tax returns (online filing deadline 31 January 2023).

How to report SEISS grants on the tax return:

• Taxpayers will be advised that 2020/21 returns and supplementary pages have a new box on which to report SEISS grants received on or before 5 April 2021; and
• Instructions are available on how to report SEISS (and other coronavirus support payments).

How HMRC corrects 2020/21 returns, if SEISS grants have not been returned in the way expected:

• Taxpayers will be asked to check the statement of account if HMRC has made an amendment to the SEISS grant entry; and
• Help is available on what to check and next steps will be included.

Changes to returns after 3 March 2021:

• Taxpayers will be reminded that they should tell HMRC about amendments made to their 2019/20, 2018/19, 2017/18 or 2016/17 tax returns after 3 March 2021; and
• Taxpayers will be instructed to follow the guidance and complete a form if amendments either:
• reduce the amount of fourth or fifth grant they are eligible for; or
• cause them to no longer be eligible for the fourth or fifth grant.

Fifth grant turnover test and the 2020–21 tax return:

• If a taxpayer completed the turnover test and provided a figure for the 12 month period from April 2020 to April 2021 which started on any date from 1 to 6 April 2020, they need to check this against the turnover figure they include in their 2020-21 tax return; and
• If they gave HMRC an incorrect turnover figure when they claimed the fifth SEISS grant or realise now that it was wrong, they need to tell HMRC by completing a form online.

Reporting coronavirus grants on tax returns

HMRC is also reminding taxpayers that grants to support businesses and self-employed people during the pandemic are taxable. If a taxpayer claimed CJRS or SEISS grants, these also need to include these as income on the relevant tax return. Depending on their business type, they’ll need to report this as income on the corporation tax return, the partnership return or the self-employment pages of the individual tax return. Guidance on how to include a grant or payment on the tax return is available.

Reasonable excuse

HMRC is aware that some taxpayers are still feeling the impacts of coronavirus, and this may still be a reasonable excuse for not meeting their tax obligations on time in some cases. HMRC will continue to consider appeals and ask for evidence if needed.

HMRC has also updated its guidance which confirms that it will allow employers to offset under and over-claims but only within a single claim period.