HMRC chases COVID-19 self-employed grant overpayments

Taxpayers identified as receiving bigger fourth or fifth grants from the Self-employment Income Support Scheme (SEISS) than they were entitled to are receiving letters from HM Revenue & Customs about repaying the money.

SEISS was created by the government to support self-employed individuals negatively impacted by the coronavirus pandemic.

There were five grants as part of the scheme. The fourth and fifth grants were worked out based on 2016/17 tax returns as well as 2019/20 returns filed by 2 March 2021.

If amendments were made to tax returns, either by the tax payer of HMRC, after 2 March 2021 that would reduce the grant amount by more than £100, or would cause the taxpayer to be no longer be eligible for the scheme, any overpayments must be repaid.

For the fifth grant, self-employed people received a grant worth 80% of average trading profits if they had a drop in turnover above 30%, or a grant worth 30% of average trading profits if turnover fell by less than 30%.

If amended tax returns show eligibility has changed for the fifth grant, HMRC will look at turnover figures. If the person is now eligible for the lower (30%) grant, but claimed the higher (80%) grant, they need to repay the difference.

A total of 1.26m claims worth over £2.8bn were made for the fifth SEISS grant.

How to repay SEISS overpayments

If you accept HMRC's decision, you must make the appropriate payment within 30 days of the date of the letter received. You need to quote the reference number on the assessment which starts with X. Full instructions are here.

Your accountant can contact HMRC and repay an overpayment on your behalf if they have received your authorisation to do so. You do this by completing a 64-8 form.

How to appeal an SEISS overpayment assessment

If you disagree with HMRC, you can appeal. You must write to HMRC within 30 days of the date of the assessment letter, explaining why you think the decision is wrong.

Penalties for not paying back SEISS overpayments

If you do not repay the overpaid grant within 30 days, you will receive a late payment penalty of 5%. A further penalty will be charged if any amount remains unpaid six months and then 12 months after the due date.

You will also have to pay daily late payment interest on any amounts still unpaid after 31 January 2023.

If you are unable to pay in full, you may be able to set up a Time to Pay arrangement and spread payments across a longer period of time. Call HMRC on 0300 322 9497.