SEISS Grants Auto-correct

Auto-correct activated

From 19 June 2021 HMRC has been automatically correcting 2020/21 tax returns where the total amount of SEISS grants reported doesn’t match their records. It will then take them a while to process all of the tax returns submitted before 19 June, as some manual intervention is needed to make any adjustment of the SEISS grants.

HMRC already has the power to correct a self-assessed tax computation for ‘obvious errors or mistakes’ without opening a formal tax enquiry. This correction should be done within nine months of the date the tax return is filed. Anyone affected should receive a notice of this correction to their self assessment via a form SA302 and a covering letter from HMRC.

Why Might This Have Happened?

There are a number of reasons why a HMRC consider a correction is necessary and a different response may be needed in each case.

1. SEISS Grant Omitted

Ife one or more of the first three SEISS grants were omitted from the 2020/21 tax return, you should accept HMRC’s auto-correction, but do check that the total of the SEISS grant figure is correct. If the total on the correction does not agree with the amounts received, contact HMRC to dispute the amount of the correction.

2. Grants Entered in the Wrong Box

The SEISS grants need to be reported separately to the turnover for the business rather than as part of the profit for the year, and must be included on the tax return for the year in which they are received. There is an exception for some partnerships, where the grant has been paid to the partnership and not to the members of the partnership.

Where the SEISS grant was declared in the wrong box in the return, but the amount was correct, you should accept the auto-correction. You then need to amend the tax return to remove the SEISS grants from where they were erroneously included on the return.

3. Amounts Do Not Match

Where the amounts reported on the tax return do not match HMRC’s figures in the auto-correction you need to double check the totals against your bank records. Then either accept or dispute HMRC’s correction.

4. No SEISS grants received

If you are sure that you did not claim a SEISS grant, and did not receive any grant, but an auto-correction suggests that a grant was claimed might have been claimed fraudulently by someone using using your personal details, contact HMRC urgently on 0800 024 1222.

5. Not self-employed

If the 2020/21 tax return has been submitted without a completed section for self-employed income or partnership income, HMRC will  conclude that you did not trade in 2020/21, in which case you were not eligible for SEISS grants. HMRC will correct the tax return to recover all of the SEISS grants paid in 2020/21.

How to Respond

As described above, you do not have to just accept this auto-correction to your tax return. You can check the amount of SEISS grant received by looking at the bank statements for the year to 6 April 2021. Also check whether any of the SEISS grants received have been repaid. You can reject the auto-correction within 30 days of the date of the correction notice issued by HMRC if you disagree with their assessment. The rejection should be made in writing to HMRC and you need to state your reasons for the rejection.