Covid-19 Grant Clawback
The government backed aid and grants, namely the Job Retention Scheme and the Self Employed Income Support Scheme, announced at the beginning of lockdown, provided some welcome relief to businesses and the self employed. Three months down the line and pay outs are said to have run into the billions, so there had to have been some plan in place as to how some of this was going to be recovered.
We already know that the grant money is taxable, and is to be included on claimants 2020/21 self assessment tax return, and will be subject to Income Tax and National Insurance. However, what if HM Revenue and Customs (HMRC) consider that the grant has been incorrectly claimed?
Well, at the time of printing, the government were consulting with HMRC on amending the Finance Act to recover these grants by way of a 100% tax charge, which will be calculated along with any tax liability due on any profits generated for the 2020/21 tax year. Any repayment of the grant will be due by 31 January 2022.
This consultation is still in the draft stages, and we will update you as soon as we have further information. What is important to remember is that these grants should only be claimed if the Coronavirus crisis has had an adverse effect on your business and your business income, so you need to think carefully before claiming to avoid a large tax charge.
Ellie Hammett ACCA
Ellie started with Evolution ABS in April 2010, gained her AAT qualification in September 2012 and fully qualified as a Chartered Certified accountant in December 2015. Ellie now manages a portfolio of mainly agricultural clients. Ellie works part time and is in the office on Monday - Thursday.
Ellie grew up on her parents’ dairy farm in Dorset, before moving to Devon in 1998. She now lives with her husband on his family beef and sheep farm in East Devon.
In her spare time, Ellie enjoys helping out on the farm (although not so much the night time lambing) and used to be an active member of Whimple and Broadclyst Young Farmers Club, competing in speaking competitions, drama and showing stock.