My first tax return of the season resulted in a client making the same money as the previous year but he had claimed £8000 in SEISS grants.
Looking at the figures: sales were down £5000 or 15% but his expenses were also down by £5000 also giving the same profit. My view is that the expenses are not relevant and that his sales were down £5000 so if he was allowed 80% then £4000 would have been adequate compensation for Covid.
He then says that he was out of work for 11 weeks because of covid which suggests to me that the first grant was deserved but the second or third were not.
The guy is a subcontractor who would normally get £3000 back but this year its only £300 since the grants are taxable but no tax deducted at source.
Assuming my client should have only claimed £4000 then he should pay back £4000 and this would reduce his tax bill by 29% of £4000 so he has only really had £2440 he wasnt entitled too.
Does anyone know HMRC thoughts on what is/isnt fair in these cases. I suspect most clients have claimed even if they have done pretty well!