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Overclaimed a COVID grant? Get the facts or be forced to fork out penalty fees

Will you need to fork back a part of your COVID grant? The onus is on the taxpayer to notify HMRC if they have overclaimed COVID-19 grants.
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The Institute of Chartered Accountants in England and Wales (ICAEW) has warned taxpayers that they have 90 days to notify HMRC of overclaimed coronavirus (COVID-19) grants. The Tax Faculty recommends that taxpayers who have claimed grants now check that they were entitled to the amount they received.

The 90-day period to inform HMRC of any overclaimed amounts is now law, according to Accountancy and Tax specialist, Abbott Moore. According to the firm, the Finance Act 2020 recently received Royal Assent, which confirms the taxability of the Coronavirus Job Retention Scheme (CJRS), as well as the Coronavirus Statutory Sick Pay Rebate Scheme and COVID-19 business support grants.

Finance Act 2020 also gives HMRC the power to recover grant payments if a recipient is not entitled to them, as well as the ability to charge penalties, said the tax specialists.

The law states that the onus is on the taxpayer to notify HMRC if they have overclaimed COVID-19 grants. A taxpayer who has overclaimed a grant and not repaid it must notify HMRC by the latest of either:

  • 90 days after the date they received the grant they were not entitled to
  • 90 days after the date they received the grant that they were no longer entitled to keep because their circumstances changed
  • 20 October 2020.

“The penalty regime is based on the usual failure-to-notify penalties with an additional provision which means that if the taxpayer knew that they were not entitled to the grant at the time when they received it (or ceased to be able to retain it), the overpayment must be notified or repayment made in full by the end of the notification period,” states the ICAEW.

“Any failure arising from this additional provision will be treated as deliberate and concealed. Failure to notify penalties could be as much as the entire amount overclaimed.”

HMRC has published guidance on how to repay overclaimed COVID-19 grants – this can be found here.

More self-employment tax news

Self-employed people can now apply to spread sums due in January into more affordable partial payments under the government’s Time to Pay initiative. Previously, the threshold was set at £10,000, but this has been increased to £30,000 to provide more support to those who file self-assessment tax returns. However, those who choose to spread their payments will be charged interest on any outstanding tax from February onwards, according to news reports.

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