Tax Checks on Self Employed Claims (July 21st 2020)

SEISS CHECKS

If you claimed a Self-Employed Income Support Scheme (SEISS) grant HMRC have said

they will be doing compliance checks to make sure you qualified.

 

RECORDING YOUR CLAIM

There are two elements:

Firstly: the claim itself and

Secondly How coronavirus affected your business.

HMRC say you must keep a copy of “all records in line with normal self employment record keeping requirements including how much you have claimed from SEISS and your claim reference number”.  The records must be kept for at least five years after 31st January tax return deadline or, if later, four years after you send your tax return.

Remember that this income is taxable and should be included in next year’s self-employed accounts.

EFFECTS OF CORONAVIRUS

You must keep evidence of how your business was adversely affected by coronavirus.  The  guidance says that you must confirm that your business “was adversely affected” by coronavirus.

WHAT COUNTS AS EVIDENCE?

HMRC says that your evidence could include business accounts showing a reduction in turnover, confirmation of any coronavirus-related business loans you have received, dates your business had to close because of lockdown restrictions and dates you or your staff couldn’t work because of coronavirus symptoms, shielding or caring responsibilities because of school closures.

WHAT TO RECORD

However, to ensure trouble with HMRC is avoided, we advise you make a more detailed record of negative impacts.  That’s not just what has happened but what you expect would have happened but for the crisis.  Think about your usual patterns of business and record what’s different this year.  Record jobs you expected to be working on or customers you expected to have.  Record cancellations or cases where work has been postponed.  If you have regular clients, regular contracts, record what you would usually be doing and what you’d usually be charging but haven’t done because of the pandemic.  Dates, names, address, usual charge-out rates, etc, will all give credibility.

Record pre-lockdown hours, customers and lost income to back up your claim.  Collect evidence of how your business has changed now, in real time, before business gets going again, so you can be sure you get the facts correct.  Simply saying “we had less income” won’t be enough. Make records now while the details are still fresh in your mind.