Claiming a grant under the Self-Employment Income Support Scheme ( SEISS) wasn’t simple in the first place. Now, there’s a further complication. Following a review by HMRC it’s warning some of those who received payments that they are at risk of having to repay SEISS grants they received because their tax records aren’t up to scratch.

Overdue or incorrect tax returns. HMRC are writing to some sole traders and business partners who received SEISS grants but haven’t submitted a self-assessment tax return for 2019/20. To claim any of the first three SEISS grants you had to confirm that you were self-employed or in a business partnership in 2019/20. HMRC therefore expected self-assessment tax returns from all those who made an SEISS claim indicating that they were in business (the deadline for submitting them was 31 January 2021). Note. SEISS grants don’t need to be declared on the 2019/20 return – they should be shown on the tax return for the following year.

Action required. If you receive a warning letter from HMRC you must act quickly. HMRC is allowing just 30 days from the issue of the letter for you to submit or amend your 2019/20 tax return showing that you were self-employed or a business partner in that year. If you miss the deadline HMRC will expect you to repay the SEISS grants.

Trap. If your self-employment or partnership ceased on or before 5 April 2020, you were not eligible and you must repay the grant in full.

Declaring SEISS. Although HMRC’s warning letter focuses on 2019/20 returns it also spotted a problem with reporting the first tranche of SEISS grants. These must be reported on your 2020/21 tax return in the right place. It’s not sufficient to have included the grants in the business income and expenditure section of your return; they must be declared in the designated box