HMRC admits overpayment on Covid grants to self-employed

HMRC admits overpayment on Covid grants to self-employed

The tax authority has admitted a number of self-employed individuals have been paid coronavirus support grants in error and some may have received an incorrect amount.

HM Revenue and Customs (HMRC) said the issue affected a small number of people who claimed from the government’s Self-Employment Income Support Scheme (SEISS) but it confirmed it would not look to recoup any payments made in error.

An HMRC spokesperson said: “We have robust processes in place to prevent grants being paid incorrectly but a small number of people were paid grants in error and some received an incorrect amount.

“The vast majority of grants were paid correctly but in a very small number of cases not all the information held on a tax return was taken into account when calculating eligibility and grants.

“Our top priority has been ensuring self-employed people receive grants quickly while protecting public money from deliberate fraudsters. 

“On this occasion we will not reclaim these payments to avoid unnecessary hardship for taxpayers who may have already used the money.”

The SEISS, which first launched in May as a mirror scheme to the government's furlough scheme, allowed claimants to receive grants covering as much as 80 per cent of their earnings during the pandemic, up to a maximum of £2,500 a month. 

At the end of May, the government announced it would extend the scheme, with those eligible able to claim a second and final grant worth 70 per cent of average monthly trading profits, covering three months’ worth of profits and capped at £6,570.

However, those affected by the previous calculation error will not receive the overpayment again, should they make a second claim.

A representative from consultancy Integrated Dispute Resolution said: “All claimants affected have been told they will now be receiving a lower sum, should they make a second grant application later this month. With 2.3m in the UK having claimed by 29th May 2020, the full scale of this HMRC error is still to be fully understood.”

Claims for the final grant open on August 17 and must be made before October 19.

Once a claim has been submitted, HMRC will carry out checks and pay the grant into the nominated bank account within the next six working days.

The grant will not need to be repaid but will be subject to both income tax and self-employed national insurance.

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