BLOG: Pay back SEISS overpayments now to avoid HMRC penalties

Rosy Hughes

By Rosy Hughes, Head of Private Client Tax

We’re approaching the deadline for the fourth set of Self Employment Income Support Scheme (SEISS) grants on June 1 – but HMRC is already cranking up the pressure on individuals that have mis-claimed under the scheme.

This mirrors the crackdown on the furlough scheme for businesses and sees HMRC stating their intent to catch out any businesses or individuals who have unfairly taken advantage of the Government support schemes during the Covid-19 pandemic.

Throughout the pandemic many self-employed people have been left confused with the changing of eligibility rules – but even so, the Government is set to issue penalties for any claims made in error.

These aren’t light penalties and HMRC will be issuing harsh fines for any abuse of financial support.

Penalties could be charged up to 100 per cent on the amount of SEISS grant overpaid. HMRC will take into account whether the individual knew they were entitled to the grant when they received it, when it became repayable or chargeable to tax when deciding the fine.

This could be devastating to some self-employed individuals, so it’s essential anyone who believes they may have claimed in error gets ahead of the problem as soon as possible.

Even better if you do so before being prompted by HMRC! So take some time to review the amount you have received, and if it’s too much, make sure you get in touch with HMRC.

Individuals will have 90 days after receiving the grant to notify of an overpayment, and then have until 31 January 2022 to settle that payment to avoid a fine.

Consider the following scenarios where claims should not have been made:

  • A consultant reduces his business activity because he wants to partially retire. He reasonably believes this will have a significant reduction on his trading profits. He is not eligible for an SEISS grant because the reduced business activity was not caused by Covid-19.


  • A dentist returns from essential travel abroad and has to self-isolate for 10 days in a hotel due to quarantine rules. Reduced demand due to self-isolation after foreign travel is not included in the eligibility criteria therefore a claim should not be made.


  • A cafe owner has fewer customers due to government restrictions on households mixing, which initially reduces her takings. She increases her prices, commences delivery services and believes her trading profits will not reduce significantly, so she is not eligible to claim a grant.

It is important to note that the eligibility criteria for each of the grants is different.  It is possible that the same set of circumstances could allow a claim to one grant, but not to another.  Hence the confusion!

The fifth set of SEISS grants for self-employed workers is on the way and it will be the final grant under the scheme.

But the final round of grant funding comes with a change, the amount you are entitled to will depend on how much your turnover continues to be impacted by the pandemic.

It will be worth 80 percent of average monthly trading profits, capped at £7,500, if the claimant has a turnover reduction of 30% or more.

Our private client tax team at Burgis & Bullock are available to help if you think you may have over-claimed under the SEISS scheme.

We can advise on the best course of action and how to take the most appropriate steps in order to avoid a fine from HMRC for abuse of the financial support measures.

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