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SEISS incorrect claim Limited Company

Can you please help clarify if my husband has accidentally incorrectly claimed SEISS grants?

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Hi, my husband's accountant was in touch today, he is only just doing his personal tax return despite being chased for this numerous times, it's obviously very late. He has advised that my husband incorrectly claimed 21k via the SEISS and it needs to be repaid in full. The text on the link he shared with us does state if you are employed via a limited company you are not eligible to claim through the scheme but I have seen some posts on here through panicked googling that suggests it might not be that black and white though it may well be in our circumstances.

My husband was solely employed via a limited company at the time and is the only company employee, paying himself a salary and via dividends. When filling out the information for the claim he answered correctly and truthfully as far as he is aware and it allowed him to claim. I realise it may have been incorrect to do so but this was a genuine error in terms of his understanding of self employed.

Can you please help clarify our situation as we are now very concerned at the amount we have to pay in a short time which we basically don't have and mid house move so also panicking about the implications of a tax debt on his credit report for our mortgage application.

Any advice would be greatly appreciated as well as any professional referrals as we funnily enough arent too happy with the situation this has left us in with his current accountant and I'm loath to just blindly call HMRC for advice having seen that some of the operatives don't necessarily have detailed understanding of the scheme rules either from comments on this site.

Thank you,

Lucy 

Replies (35)

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By Truthsayer
28th Jan 2022 00:46

This makes no sense, as it is impossible to claim SEISS if not self-employed. I don't merely mean he is ineligible, I mean there is no mechanism by which it could have been claimed in the first place without him already being on HMRC's system as self-employed. Whatever has happened, ask the accountant to sort it out. It sounds as if all the fault is at your end, so I suggest you don't start throwing mud at your accountant right now.

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By Paul Crowley
28th Jan 2022 01:03

Your accountant did not make the claims
Do not be in a rush
Very odd
Were prior returns just plain wrong? Did returns show "dividends" as self employed income?

IT IS BLACK AND WHITE
SEISS The SE stands for Self-employed
Is this by any chance a new accountant and you did your own returns in prior years?
By that I mean prepared the returns incorrectly

If there was aproper PAYE scheme then the help on offer was the so called Furlough scheme (CJRS)

https://www.gov.uk/guidance/claim-for-wages-through-the-coronavirus-job-...

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By Hugo Fair
28th Jan 2022 01:08

"My husband was solely employed via a limited company at the time" ... note the final 3 words.
So had he been self-employed up to then (by which I mean was he previously registered with HMRC as self-employed and maybe forgot to tell them that this had now ceased)?
That might explain why the HMRC system allowed the claim ... but even so it's highly unlikely that the claim was valid. WHY does your accountant say it needs to be repaid?

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By sarahg
28th Jan 2022 05:28

I had this happen with a client

They were previously self employed, but had set up a limited company prior to the pandemic. The SEISS system allowed them to make a claim, however, not by answering the questions accurately

There is no claim if your husband is not self employed and the money will need to be repaid

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By Matrix
28th Jan 2022 06:37

On what date did the self employed business cease?

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By Leywood
28th Jan 2022 07:18

Oh blame the Accountant. It’s always their fault isn’t it. No!! What a cheek.

I do hope your Accountant is on this forum, reads this and disengages.

Something doesn’t add up. Rather than us all attempt to drag the facts out of you, make an effort and get the rules of each scheme out and read them. Go back to your Accountant and have a proper discussion.

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Replying to Leywood:
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By paulwakefield1
28th Jan 2022 08:27

I read the OP's concern with the accountant as due to him/her only having just got around to doing their personal tax return having had the information for some time. Earlier exposure of the problem would have given them more time to deal with the situation. I don't get the impression that the accountant is being blamed for an incorrect SEISS claim in itself.

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By rmillaree
28th Jan 2022 07:59

Hello Lucy
Please ignore any snide comments on here - this is site for acountants only normlaly (taxationweb.co.uk posibly more appropriate)

Unfortunately its vitally important that you and your husband urgently check the full details of all claims made to see if he was eligible - if he wasnt you need to contact hmrc and flag up that you incorrectly claimed.

The danger here is that many probably wrongly presumed they had a right to claim when they didn't and didnt really check closely enough before saying yes to the cash - hmrc possibly havent helped by perhaps giving the impressions that "you may be eligible" without perhaps providing enough warnings that you need to check the exact detail.

From your comments i fear you husband has been at best slapdash in their approach and possibly worse. When peeps pleed ignorance though only deep down they know how ignorant they were.

Your only real hope here is that there was or would have been some ongoing sole trader buisness that met the criteria and there could have been some confusion. Practicably speaking those whose sole ran out directly due to covid may have been eligible had they planned to continue - if they ceased sole trader before mid march 2020 and thats a fact then unfortuantely its clear your husband should never claimed and quite frankly his conduct maiking the claims suggests he either did not read any of the info actively chose not to read any of the info or compeltely ignored the info that would have confirmed if you are nota sole trader you are not eligible.

Presuming he was not eligible ensure ensure correct reporting is done and then contact hmrc to sort out the damage - hopefully hmrc will take reasonable payments that dont put you in undue hardship.

Note your accountant is very unlikely to be the guilty party here - accountants were specifically not allowedd to make the claims - probably very rightly for the very reason that ultimately your husband made declaratins to say he was eligible here . Being frank someone signing on the dotted line for more than 2 claims here without checking your eligibility clsoeley will probably be an almost unfathomable situation to most bods here.
Feel free to pm me if you need some assistance here.

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Replying to rmillaree:
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By Lw18
28th Jan 2022 09:09

Thank you, we will look into the areas suggested already and be in touch if needed. Really appreciate the offer!

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Replying to rmillaree:
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By Mr_awol
28th Jan 2022 09:59

rmillaree wrote:

Hello Lucy
Please ignore any snide comments on here

It's like raiiiiiin. On your wedding day.

rmillaree wrote:

If they ceased sole trader before mid march 2020 and thats a fact then unfortuantely its clear your husband should never claimed and quite frankly his conduct maiking the claims suggests he either did not read any of the info actively chose not to read any of the info or compeltely ignored the info that would have confirmed if you are nota sole trader you are not eligible.

To be fair, a hell of a lot of one man bands dont really understand the difference and considcer themselves 'self employed' whether they are a sole trader, partnership OR sole director/shareholder limited company. This isnt helped by the banks, and even some accountancy bodies, referring to 'self employed' people as those having more than x% shares in a company through which they trade, etc.

But yes, i assume the OPs husband has made an incorrect claim via either wilful ignorance as you suggest, or misunderstanding as above.

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By Lw18
28th Jan 2022 09:01

Thank you all for your help, not at all meaning to be negative towards our accountant in anyway apart from as pointed out the lack of time we have to manage this. I agree that if we weren’t ineligible to claim it’s completely our fault, but also know my husband would not have claimed if he didn’t believe he was eligible and would not have knowingly submitted incorrect information . Our accountant has always done his tax returns, I’ll check how the dividends were listed on previous tax returns and when he moved over to the limited company structure. The information you have given us has helped in terms of working out how this may have happened and that we will have to repay so at least we know where we stand and can hopefully work out a repayment plan today, so thank you all.

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Replying to Lw18:
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By rmillaree
28th Jan 2022 09:57

I guess the question for your husband is - what checks did he do i suspect ihis answer will be sketchy at best something alone the lines of i presumed .......

Note hmrc should only have flagged up he was elgibible if he was previously a sole trader and that is presumably where the confusion arises. The obvious question for your husband is why did he not check with the acountant ?

Invariably in situations like this if there has a been a discussion had between your husband and the accountant i suspect neither will agree what was said by ther other party was said.

Note if your husband was still continuing or willing to try and trade as sole trade past march 2020 it is not so clear cut that he was not eligible.

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Replying to rmillaree:
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By lionofludesch
28th Jan 2022 10:20

Fair to say that many company directors see themselves as self employed. Sadly, they're not.

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Replying to lionofludesch:
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By rmillaree
28th Jan 2022 13:36

And many banks treat company directors as being self employed - are they wrong to do that ?
Sadly what should be clear and precise terminology is generally anything but.

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Replying to rmillaree:
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By Catherine Newman
28th Jan 2022 13:42

I tear my hair out of this. I tell them I am an employee-a director of my limited company. They come back and say I am self-employed as I can control what the company does.

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Replying to rmillaree:
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By Catherine Newman
28th Jan 2022 13:45

I tear my hair out over this. I tell them I am an employee-a director of my limited company. They come back and say I am self-employed as I can control what the company does.

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By bernard michael
28th Jan 2022 09:27

How long has the accountant had the information to prepare the return??

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By lionofludesch
28th Jan 2022 09:30

Just to clarify, why did you imply that your accountant had left you in this situation? Did you ask his advice before you claimed this SRISS money?

At least save yourself the 30% penalty by owning up to HMRC.

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By Rammstein1
28th Jan 2022 10:34

Did he claim any furlough payments? That might not look good with HMRC.

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By fawltybasil2575
28th Jan 2022 10:49

@ Lw18 (OP).

You may find useful the following links:-

https://www.icaew.com/coronavirus/self-employment-income-support-scheme

https://www.gov.uk/guidance/tell-hmrc-and-pay-the-self-employment-income...

Reading between the lines, I surmise that your husband incorporated his business in either 2019/20 or 2020/21: and it is this fact which is at the root of your husband’s problem (as can be seen from the above links). In submitting his SEISS applications, he will probably have inadvertently “missed” the fact that such incorporation effectively renders invalid any SEISS applications.

Taking at face value your comments re your husband’s accountant, re the lateness of his contacting your husband re the 2020/21 Tax Return, it is (in that regard, I assume that there has been no delays in your husband’s providing information for the preparation of that Tax Return) in my view unacceptable that the accountant has left matters “until the eleventh hour” (his having done so has placed your husband in a predicament) .

IMHO, the accountant should have provided (or at the very least offered to provide) guidance, to your husband, re the SEISS claims, at the time(s) of those claims – whilst I am unconvinced by the HMRC claim that there was insufficient time for HMRC to allow accountants to submit the actual SEISS claims, best practice was for the accountant to provide such guidance to their clients. If the accountant had taken that proactive approach, then your husband would not now be under pressure.

The key to your husband’s predicament lies in, as advised above, establishing the date of incorporation.

The £21K to which you refer is presumably the first three SEISS claims in total. If, as appears likely, your husband also received the SEISS 4 and/or SEISS 5 claims, then these may also require to be repaid (for which purpose, please see the second link above).

To reaffirm, the key lies in the date of incorporation. If, at the date of EACH claim, your husband intended to continue as self-employed, but then LATER decided to incorporate, then (subject of course to your husband's complying with the other eligibility rules) some or all of those SEISS monies will NOT be required to be repaid.

Basil.

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Replying to fawltybasil2575:
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By I'msorryIhaven'taclue
28th Jan 2022 11:30

fawltybasil2575 wrote:

To reaffirm, the key lies in the date of incorporation. If, at the date of EACH claim, your husband intended to continue as self-employed, but then LATER decided to incorporate, then (subject of course to your husband's complying with the other eligibility rules) some or all of those SEISS monies will NOT be required to be repaid.

>

Good morning, Basil. Regarding Husband's future intentions, is it also technically possible that he incorporated in addition to being self-employed; and that even now he intends to resume his self-employment in addition to (or perhaps even instead of) his employment?

fawltybasil2575 wrote:

Taking at face value your comments re your husband’s accountant, re the lateness of his contacting your husband re the 2020/21 Tax Return, it is (in that regard, I assume that there has been no delays in your husband’s providing information for the preparation of that Tax Return) in my view unacceptable that the accountant has left matters “until the eleventh hour” (his having done so has placed your husband in a predicament) .

I haven't seen it mentioned so far that Husband might take advantage of HMRC's "extension" to the SA filing date. (Lucy, the filing deadline is still 31st January but tax returns submitted during February will have their penalty waived this year). That would serve to remove any urgency.

fawltybasil2575 wrote:

The key to your husband’s predicament lies in, as advised above, establishing the date of incorporation.

Lucy, the panel needs the month and year of your husband's limited company's incorporation. And the date it commenced trading, if that is significantly later.

Rammstein1 wrote:

Did he claim any furlough payments? That might not look good with HMRC.

That would torpedo matters! Lucy, kindly answer Rammstein1's question as that might just override everything!

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By fawltybasil2575
28th Jan 2022 12:31

@ I’mso ….. (your 11.30 post).

Good afternoon. Thanks for your, as ever, detailed post.

(1) In responding to your helpful comments addressed to me, and forgive me if I have misunderstood you, it appears possible that you are contemplating that a claim could be valid if a self-employment has ceased but will recommence in the future.

The Treasury Directions prescribe that the self-employment must STILL be continuing at the date of the claim, AND that there is an intention to carry on a trade (whether the same trade or any other) in the tax year. Sub-paragraphs (a) and (d) of Para 4 of the Treasury Direction are in point here:-

https://www.gov.uk/government/publications/treasury-direction-made-by-th...

(2) As regards the "urgency" aspect, you are of course correct re that, under NORMAL circumstances, the "no Penalty if submitted in February" concession is of considerable benefit. That said, there are occasions where submitting in February 2022 can be potentially dangerous (for the client, and thus potentially also for the accountant); the major factor being that such submission extends the enquiry window.

As a general comment, therefore, if an accountant (for whatever reason) submits a 2020/21 Tax Return, received on say 30 January 2022, in February 2022, he lays himself open to a claim for negligence if the client has grounds for asserting that their accountant, where HMRC formally ENQUIRE (into the "February 2022 submitted" Return) in (say) February 2023:-

(i) Was late in asking for information for the preparation of the Return, or
(ii) Was late in processing that "information" received, or
(iii) Was late in sending the Return to the client, or
(iv) Was late in submitting that Return to HMRC after received back from the client.

[I refer of course to a claim by the client that HMRC might have "missed" the enquiry deadline of 30 January 2023 if that Tax Return had been submitted on or before 31 January 2022].

Basil.

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Replying to fawltybasil2575:
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By I'msorryIhaven'taclue
28th Jan 2022 13:46

Hello Basil,

Many thanks for your reply. By way of clarification, I had in mind a possible extension of your observations regarding the Husband's future intentions:

fawltybasil2575 wrote:

If, at the date of EACH claim, your husband intended to continue as self-employed, but then LATER decided to incorporate, then... some or all of those SEISS monies will NOT be required to be repaid.

So if Outcome 1 is to repay the SEISS moneys in full, then (subject to the Husband's intentions at the time of the SEISS claims) you have identified and described, above, an alternative outcome; Outcome 2, if you will.

As an extension to which I was exploring the possible existence of an Outcome 3, whereby the self-employment has not permanently ceased but rather was temporarily put on hold; whilst the employment with new limited company has been in addition to that self-employment.

Always assuming, of course, that such have been the Husband's intentions throughout.

It seems apparent that HMRC have not been notified of any cessation of self-employment, and going forward the Husband would presumably be able to run the two businesses in tandem.

Separately, and regarding delayment of the Husband's tax return until February, I appreciate the risks you have outlined and suppose that ultimately the OP's husband will have to make a value call on the matter. At least he may now do so better-informed.

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Replying to fawltybasil2575:
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By rmillaree
28th Jan 2022 14:18

strewth how many levels of hypothetical do we need here - not sure that we need to turn this into inception the moview

"it appears possible that you are contemplating that a claim could be valid if a self-employment has ceased but will recommence in the future."

Errrr lets look at what was said - looks like there was no mention of cessation to me from my reading of what was said - perhaps i am missing something ?

"is it also technically possible that he incorporated in addition to being self-employed; and that even now he intends to resume his self-employment in addition to (or perhaps even instead of) his employment?"

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By doubletrouble
28th Jan 2022 12:53

Could it not be possible that someone has an ongoing sole trader business as well as a Ltd Company and that they could be eligible for the SEISS grants as well as furlough?

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Replying to doubletrouble:
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By rmillaree
28th Jan 2022 13:41

doubletrouble
"Could it not be possible that someone has an ongoing sole trader business as well as a Ltd Company and that they could be eligible for the SEISS grants as well as furlough?"
Absolutely possible - however note the op has suggested that what was sole trader is now limited so its unlikely that both would have been trading at the same time - so its fairly reasonable to presume its more likely than not that that at best one of the other should have been claimed - but possibly neither.

"when he moved over to the limited company structure."

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By bernard michael
28th Jan 2022 14:24

After looking at all the replies various the one that's missing is that he isn't entitled to the SEISS grant and should repay it

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Replying to bernard michael:
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By lionofludesch
28th Jan 2022 14:38

bernard michael wrote:

After looking at all the replies various the one that's missing is that he isn't entitled to the SEISS grant and should repay it

OP's accountant said that and the OP hasn't provided any information that contradicts that advice.

To be honest, the OP lost a lot of support by trying to shift the blame to the accountant.

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Replying to lionofludesch:
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By paulwakefield1
28th Jan 2022 14:45

Not quite fair. The OP has never blamed the accountant for the SEISS claim itself only for the late notification that they had apparently cocked up.

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Replying to paulwakefield1:
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By bernard michael
28th Jan 2022 14:58

paulwakefield1 wrote:

Not quite fair. The OP has never blamed the accountant for the SEISS claim itself only for the late notification that they had apparently cocked up.


But the OP hasn't replied to my query as to when the information was provided. We're all used to clients who think that information in = tax return out immediately. The fact we have other clients and there is a work load schedule never seems to bother them
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Replying to paulwakefield1:
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By lionofludesch
28th Jan 2022 14:58

It wasn't my interpretation but you could be right.

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Replying to lionofludesch:
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By paulwakefield1
28th Jan 2022 15:02

OP confirmed this - See 9:01 (but it was also my initial reading of the query).

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By I'msorryIhaven'taclue
30th Jan 2022 17:05

Source https://www.att.org.uk/covid-19-self-employed-income-support-scheme

Who wasn’t eligible?

You were not eligible for a SEISS grant if any of the following applied:

You are a director of a limited company (though you may be eligible for some support under the Job Retention Scheme).

And just in case our protagonist knew more than us, and so avoided a directorship in his company, there's a secondary hurdle:

Your trading income forms less than half of your total income (for example, your main income comes from employment, which you top up with a smaller amount from self-employment).

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Replying to I'msorryIhaven'taclue:
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By Tax Dragon
30th Jan 2022 17:22

Blimey Mr Clue, you are redeeming yourself... actually looking up actual rules. [Or near enough.]

I need some (more) gin.

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Replying to Tax Dragon:
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By I'msorryIhaven'taclue
30th Jan 2022 17:40

So could I... kindly pass the bottle.

Naturally I shall take a bow, even though I didn't so much look it up as stumble upon it. Although, to my minor credit, I was looking up the rules on something (else) at the time. [Or near enough ;-]

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