SEISS grants and tax return processing

HMRC has been unable to automatically process a significant number of 2020/21 self assessment (SA) returns because the figures in the relevant boxes on the return do not match HMRC’s record of claims for self-employment income support scheme (SEISS) grants one to three.

ICAEW TAXguide 12/21 (available to all ICAEW members) explains how SEISS grants should be reported on SA tax returns.

HMRC intends to use its power to correct returns to include the grants in the correct box; a SA302 tax calculation showing the correction will be issued when this is done.

HMRC has indicated that it will introduce a fix to autocorrect returns in early July, but it may take longer to clear the backlog of returns already submitted.

These corrections will be appropriate where the grants were not included on the return, however, they will be incorrect if the grants have been reported on the return but in the wrong box. In this situation the taxpayer or their agent will need to file an amendment; rejecting HMRC’s correction will not resolve the issue.

HMRC is still investigating why so many returns have not been processed automatically, but has confirmed that:

• Returns with partnership income are being processed, even if the grants are not reported on the return. This is on the working assumption that the grants will have been paid into the partnership and reported accordingly and is subject to later compliance checks.
• Where the taxpayer has more than one trade the guidance is that the grants should be allocated between the trades on a just and reasonable basis. HMRC’s system crosschecks the total SEISS grants reported and this is not thought to be a reason for the problem.
• Box 20.1 on page 8 of the main section of the return should be ticked but if it is not the return should still be processed automatically.  

Avoiding the problem

The options for cross-checking to HMRC’s records of SEISS grants prior to filing a return are as follows:

• Return to your claim for the SEISS (gov.uk) allows the taxpayer (not the agent) to view HMRC’s record of grants claimed. Agents can ask taxpayers for a printout of the information on this webpage (all claimants have credentials to sign in as they needed them to make claims).
• Taxpayers using HMRC’s online SA software are prompted with the figure that HMRC expects them to report as SEISS grants. The software is not fully pre-populated as some taxpayers may need to allocate the grants between different trades or may not need to report them if paid into a partnership.
• The SA pre-population service has been enhanced to return the figure that HMRC is expecting for SEISS grants. Agents with software that incorporates this service will eventually have access to the figure that HMRC is expecting, but the service will not return data until the individual’s PAYE and National Insurance record has been reconciled (this takes place between June and October).

ICAEW and other professional bodies have pressed HMRC to include SEISS grant data in the agent portal alongside other data for completing clients’ tax returns. HMRC has explored this possibility but so far it has not been possible due to security considerations.