HMRC is writing to recipients of Self-Employment Income Support Scheme (SEISS) grants who have not filed a self-assessment tax return for 2019/20, detailing the action that claimants need to take.
To be eligible for a SEISS grant, individuals must have been trading as self-employed or in a partnership in 2019/20. They were required to complete an income tax self-assessment tax return for that year, which should have been submitted by 31 January 2021.
HMRC is now writing to those who made a claim for one of the first three SEISS grants (which ran from March 2020 to January 2021), but who have either not submitted a 2019/20 return or whose return did not report income from self-employment or a partnership.
The letter clarifies that claimants must submit or amend their 2019/20 tax return to include the relevant information within 30 days of receipt, or repay the grants they received in full.
Those individuals that ceased to trade in 2019/20 were not eligible for the grant and must repay it in full. In cases where the grants were received more than 90 days before it is repaid, they may also be liable for a penalty.
HMRC’s letter recommends that claimants get in touch with their tax adviser or accountant for support.
Which tax return should include SEISS grants?
Which tax return (tax year) you include your SEISS grants in depends on which grant it is and whether you are a self-employed individual or a partner in a partnership.
The table below summarises the position:
|SEISS grant claimed||Type of business||Tax return to include the grant|
|Any of the first three SEISS grants||Self-employed||2020/21 self-employment section/ pages. Please note it does not matter what basis period (accounting period) you use – the first three grants must be included on the 2020/21 tax return.|
|Any of the first three SEISS grants||Individual partner in partnership||There are two possible scenarios which are detailed in the section below.|
|4th and 5th SEISS grants||Self-employed||These grants are taxed in the tax year they are received, this should be 2021/22.|
|4th and 5th SEISS grants||Individual partner in partnership||These grants are taxed in the tax year they are received, this should be 2021/22. However, there are two possible scenarios which are detailed below.|
Partnerships – which tax year?
If you are a partner who has claimed the SEISS grants because the coronavirus pandemic has adversely affected the partnership’s business then where and how the SEISS grants are treated for tax purposes depends on who actually received the grant.
If you, as a partner, were eligible for the SEISS grant(s) and claimed and received the income into your individual bank account, so it is not recorded as partnership income in the partnership accounts, then the grants will be treated in a similar way to how they are treated if you are a self-employed individual. This means:
- The first three grants need to be included on your 2020/21 tax return (regardless of the partnerships accounting period/basis period). The total of the SEISS grants should be included on your partnership supplementary pages, in box 9.1 on either the SA104S short partnership pages or the SA104F full partnership pages. Your SEISS grants should not be included on the partnership tax return (SA800).
- The 4th and 5th grants are taxed in the tax year they are received, so should be included in the 2021/22 partnership supplementary pages.
There are different rules if you claimed the SEISS grants and they were treated as partnership income and included in the partnership accounts before being distributed to all the partners.