As we reported on 27 May HMRC had to stall the processing of many 2020/21 SA tax returns where the return included, or should have included, a report of a SEISS grant.
On 19 June HMRC began to automatically correct those SA returns where the total of SEISS grants reported doesn’t match the HMRC record of what has been paid out for SEISS grants 1 to 3. The correction is issued on a form SA302.
You need to examine this correction to the return and react to HMRC according to these circumstances:
- The SEISS grant was omitted from the return – accept HMRC’s auto-correction if the SEISS grant figure is correct, otherwise contact HMRC to dispute the amount of the correction.
- The SEISS grants were reported on the return but in the wrong box – accept the auto-correction and amend the tax return to remove the grant from where it was erroneously included.
- The SEISS grant amounts reported do not match HMRC’s records – check against records and either accept or dispute the correction.
- The taxpayer did not receive a SEISS grant – this may suggest that a grant was claimed fraudulently using the taxpayer’s personal details, contact HMRC urgently on 0800 024 1222.
- The SA return does not include self-employment or partnership pages – HMRC will interpret this is as a cessation of trade and correct the tax return to recover the whole of the grant on the basis that the client was not entitled to claim.
It will take HMRC some time to process all of the SA returns submitted before 19 June 2021, as some manual intervention is required.
Applications for the fifth SEISS grant (SEISS-5) are due to open in late July. HMRC has started to write to taxpayers who will be eligible for either the SEISS-4 or SEISS-5 grants for the first time. These will be traders who commenced their business in 2019/20. There are around 100,000 of these new traders, but HMRC did not manage to contact them all in advance of the SEISS-4 grant process. Those taxpayers will be asked to confirm their identity and provide some evidence of trading.
Further guidance on how to report SEISS and CJRS grants on tax returns and be found in the ICAEW Tax Guide 12/21.
Written by the Tax Advice Network