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client not eligible for SEISS grants

what is the accountant liability?

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hi. If a client has claimed self-employed grabts without being eligible and we discover it when we do their annual accounts and tax return, what is our position? Granted we werent involved in the SEISS claims at the time, but to prepare a good tax return we need to look into the issue and decide eligibity as this will affect tax treatment of the grants (taxable or repayable). There may also be AML rehgulations issues. If HMRC look at the profits following submission of tax return and they enquire (with possible penalties), I wouldnt want top be held either negligent or in breach of AML. Any comments please?

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RLI
By lionofludesch
18th Nov 2021 12:57

If the client can't justify his claim and refuses to enter it on his return as an overclaim, then you cannot be associated with an incorrect return.

You must disengage.

The big question is the "if" bit. His claim may be clearcut incorrect. It might be less obvious. It's going to be your judgment call there.

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Stepurhan
By stepurhan
18th Nov 2021 13:39

The real question is can you decide eligibility.

It changed on later rounds, but on the first round a business simply needed to be affected by Covid. Increased profits does not mean they were not affected. It is possible that the business could have grown faster otherwise, so the higher profits are still lower than the profits would have been.

If you know that it is just a case of "free money, grab it" without any thought then, as lion has said, you should disengage. But if they offer an explanation of their thinking that isn't complete nonsense, then that should be enough. We were cut out of the original applications, when we could have asked the difficult questions up front. HMRC cannot expect us to spend a lot of time policing it after the fact.

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Replying to stepurhan:
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By jonharris999
18th Nov 2021 13:59

Agreed.

I am still to hear of any example of a challenge to a claim by HMRC.

There was lots of stuff around about fraud and all the schemes a day or two ago. I will bet my chattels that close to 100% of frauds in SEISS will turn out to be blatant theft eg fake IDs and NI numbers etc.

Many threads on this forum began with taxpayers or their accountants wondering if claims were legitimate in particular scenarios. The vast majority of the replies to the vast majority of these came down on the side of legitimacy. I do counsel any accountant in the OP's position to first make themselves completely certain that the claim was incorrect before they counsel the client accordingly. I maintain that these situations will be very, very rare.

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Replying to jonharris999:
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By Paul Crowley
18th Nov 2021 14:14

Agree in full
Difficult to challenge on first three payments
HMRC asked the questions to client and client answered them

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By SXGuy
18th Nov 2021 14:16

Profits at the end of the year are NOT the basis for determining eligibility. I suggest you go away and re think your processes and then come back if you have any other questions.

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By Calculatorboy
18th Nov 2021 15:01

Where does it say hindsight is the basis for eligibility .we are not unpaid bloodhounds .

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By Hugo Fair
18th Nov 2021 15:07

I can't resist drawing attention to the delicious typo in 1st line of OP ... replacing 'grant' with 'grabt' (presumably pronounced grabbit)!

But, whilst I totally agree with the first two responses (from lion and stepurhan), it might be worth drawing your client's attention (during your discussion) to the following announcement yesterday regarding Joint and Several Liability:

https://www.gov.uk/government/publications/joint-and-several-liability-t...

This was just one of 4 new JAS liability announcements made as the first new steps in the plan to get back money that HMRC regard as due from grants or avoidance etc!

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ALISK
By atleastisoundknowledgable...
19th Nov 2021 08:44

I get clients to confirm in writing that they were Eligible for any grants they took and that they have been correctly treated in the TR.

I’m not spending hours trying to fathom the rules for each grant and each persons eligibility. If I’d’ve been involved at the beginning, I’d’ve got each client to sign to say they were eligible, just as I did for CJRS. Doing it now is no different.

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By SteveHa
19th Nov 2021 08:49

HMRC completely sidelined agents from the whole process. I fail to see how there is any culpability for agents in those circumstances.

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Replying to SteveHa:
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By I'msorryIhaven'taclue
19th Nov 2021 13:38

Not unlike Child Benefit claims then.

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By I'msorryIhaven'taclue
19th Nov 2021 13:36

The problem as I see it is that the minute you openly involve yourself in checking the SEISS calculations then you become, potentially, an accessory to the fact that the client may have been ineligible.

Difficult to backtrack on that further down the line by claiming that your suspicions were not aroused.

Your client isn't going to want to pay you to check his figures in order to tell him he was or wasn't eligible for (and might possibly have to repay) his SEISS. So for my money it'll probably boil down to reporting him under AML and then doing the sums after he has so instructed you.

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neand
By neanderthal
19th Nov 2021 14:13

problem is we are regulated for AML regulateions and we cannot hide your head in the sand and not do nothing about eligibility. We are also under professional guidelines to provide care of duty and that means not being negligent in our work. and the tax treatment or not of grants is determined by eligibility decisions on our part. first they dont let us nowhere these claims to advise claims and throw money left right and centre and after the party they want us to do the work and start grassing people on suspicion (!), and doing so may have an impact on our livingood too!

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Replying to neanderthal:
RLI
By lionofludesch
19th Nov 2021 15:50

neanderthal wrote:

problem is we are regulated for AML regulateions and we cannot hide your head in the sand and not do nothing about eligibility.

A few double negatives in there, neanderthal.

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