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HMRC consults on recovery powers for CJRS and SEISS

1 June: HMRC will be able to recover grants issued under the Coronavirus Job Retention Scheme (CJRS) and Self-employed Income Support Scheme (SEISS), issue penalties and charge tax under proposed amendments to the Finance Bill.

HMRC has launched a short consultation on draft clauses to Finance Bill 2020 which confirm the taxability of CJRS and SEISS grants, and outline how it will be able to recover payments to which the recipient is not entitled and charge penalties in cases of deliberate non-compliance.

The operation of the schemes has been legislated through directions, but the taxability and powers must be in primary legislation.

ICAEW’s Tax Faculty explains that HMRC's intention is to recover any SEISS grant which was not due by way of a 100% tax charge (with the regular tax charge being dis-applied) in a manner which is independent of the self assessment tax return (although there will be an opportunity on the tax return to declare liability to the recovery charge).

The Tax Faculty understands that penalties will only be levied in cases of deliberate non-compliance.

HMRC is looking for SEISS grants which were correctly paid to be taxable on receipt in 2020/21, irrespective of the business accounting date and with no allocation of any part of the grant to March 2020.

It is not yet clear how much resource HMRC will be allocating to making compliance checks on grants.

With CJRS a certain amount of checking is built in at the claims stage, but this focuses on whether the employee appeared on an RTI report filed prior to 19 March 2020, rather than for example the amount claimed or whether the employee is not working.

With SEISS, as HMRC calculates the amount of the grant there is little, if any, further checking at the claims stage. The taxpayer is asked to confirm that they meet the eligibility criteria. It is likely that HMRC will run reports to pick up cases where the individual did not continue to trade on a self-employed or partnership basis at least throughout 2019/20.

Contribute to ICAEW’s consultation response: Please send any comments by email to Caroline.Miskin@icaew.com before 10am on Monday 8 June.

Directions already laid

For reference, the existing Directions covering the operation of the schemes can be found by following the links below:

Treasury Directions published on 15 April 2020
Treasury Directions published on 1 May 2020.
Treasury Directions published on 22 May 2020 (modifies the earlier direction, see above)