HMRC outline penalties for misuse of SEISS

07 May 2021


  • HMRC have outlined the penalty regime for abuse of the Self Employed Income Support Scheme (‘SEISS’).
  • In the factsheet released on 28 April 2021, HMRC have outlined the penalties that they can charge for an overclaimed SEISS grant.
  • In their guidance, HMRC confirm that one of their main priorities is ‘tackling deliberate non-compliance and criminal attacks’. To recover the full amount of an overpaid grant, HMRC can make a tax assessment for the amount that the taxpayer was not entitled to and has not repaid.
  • This means that if they knew that they were not entitled to the grant the failure by the taxpayer will be treated as deliberate and concealed, meaning that a penalty of up to 100% of the amount of the SEISS grant that they were not entitled to receive.
  • HMRC can charge a penalty if the taxpayer failed to notify them within the notification period (which ended on 20 October 2020 or 90 days after receipt of the SEISS grant which they were not entitled to (whichever was later)) that they were chargeable to Income Tax on an overclaimed SEISS grant.
  • When deciding the amount of a penalty, HMRC will consider whether the taxpayer knew that they were entitled to the SEISS grant:
    • when they received it, or
    • when it became repayable or chargeable to tax because their circumstances changed
  • Whilst a failure to notify within the notification period legally leaves the taxpayer liable to penalties of 100% of the amount of the grant, penalties will only be charged where repayments for overclaimed grants are not made by 31 January 2022.
  • Appeals relating to penalties must be made within 30 days of the date of the decision notice.

Aspire Comment

It is imperative that individuals who are aware that they have received a grant payment that they are not entitled to take action to repay the amount.  Whilst HMRC is allowing an extended period for notification, ending on 31 January 2022, legally the individual will be liable for a penalty of 100% of any overpayment that they have not notified within the set parameters. 

This time extension looks like a hopeful action – maybe if they give more time for business to return to normal more will decide to repay the amount that they were not entitled to.  Only time will show how much intelligence HMRC have to take recovery action. 

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