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Was I wrong to claim the SEISS grants?

I claimed thr grants. Was that wrong?

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I run a small business and I claimed the first 2 SEISS grants. My income was down slightly, I had increased cleaning costs and I had to furlough 1 full time employee and 1 part time employee. I was entitled to maximum grant, so I think the combined total is just over £14k.

Since September, my work has picked up significantly. A client expanded their business which in turn generated a large amount of work and income for my business. It looks like my income in 20/21 may end up about £10k higher than 19/20, plus the grants.

Annoyingly, I used up the grant money by paying off some personal debts.

Was I wrong to claim? What will happen? I couldn't predict the future. Obviously I haven't claimed grant 3 and won't claim grant 4.

Replies (17)

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By bernard michael
17th Dec 2020 17:17

The grant is based on the situation at the time of application. If at that point you were adversely effected you are OK to claim

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By jonharris999
17th Dec 2020 17:31

You have no problem.

You qualified for Rounds 1 and 2 because your business was adversely affected by the crisis.

The Round 3 criteria are a little more complex but as you say, you have not claimed.

There is no mechanism in the Directions for Rounds 1 & 2 by which your profits for the year will be analysed or compared to last year's. The only thing you may ever be asked to evidence is the adverse effect - the increase in costs to which you referred. And it is pretty obvious that you had to buy more equipment/PPE/materials etc.

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By Hugo Fair
17th Dec 2020 19:29

Quote:

Was I wrong to claim? What will happen?

Yes.
Nothing (probably).

My first answer is based on your precise wording ... if you'd said "Was I incorrect to claim?" then the answer is No (as per other responses). But given that it was your choice to make a claim and that you spent it on "paying off some personal debts", it's surely obvious to you that you didn't need it for the purpose intended by the Chancellor.

The caveat on the second answer is because the govt. needs the money, so the majority of 'compliance activity' next year will be focussed on getting grants repaid where there is any possibility of doing so ... and your forecast full year results will promote you up the ladder of potential targets.

This is not (as often portrayed) an argument between 'what the law allows' and 'what your conscience tells you' ... it is about respect for others in worse positions.

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Replying to Hugo Fair:
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By SXGuy
17th Dec 2020 20:35

Some of what you said I find a bit ridiculous.

It was up to the op how they spent the money if they met the criteria that's all that matters, further id say being self employed, repaying personal debt could also have a knock on effect of being able to keep the business a float.

Further to that, every single one of us will be repaying this debt for years to come. Morality doesn't come in to it. If the op hadn't claimed when they were entitled to, they'd still be paying the increased taxes just like everyone else.

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Replying to SXGuy:
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By Hugo Fair
17th Dec 2020 21:04

Well, each to his or her own (opinion). I was careful to say that "This is not .. an argument between 'what the law allows' and 'what your conscience tells you'".

If you look at the GOV.UK guidance (and yes I know that this does not create a legal foundation but is often a hefty clue as to how HMRC will interpret things) at https://www.gov.uk/guidance/claim-a-grant-through-the-coronavirus-covid-... - you will see right at the start:

"HMRC expects you to make an honest assessment about whether you reasonably believe your business will have a significant reduction in profits" ... where this is due to "a new or continuing impact from coronavirus".

Hence my comment (irrespective of what people may feel was 'legal') regarding the likelihood of the OP's forecast full year results promoting them up the ladder of potential targets by HMRC.

In these uncertain times, that is of course merely one person's opinion!

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Replying to Hugo Fair:
By SteveHa
18th Dec 2020 09:27

Quote:

- you will see right at the start:

"HMRC expects you to make an honest assessment about whether you reasonably believe your business will have a significant reduction in profits" ... where this is due to "a new or continuing impact from coronavirus".

However, you will note the wording, "...reasonably believe", and if that belief existed at the time of claiming, regardless of whether or not that belief turned out to be wrong, then there has been nothing done wrong.

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Replying to SXGuy:
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By AC71
17th Dec 2020 21:21

Yes everyone will be paying this off.

But not all of us got fruit from the magical money trees

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Replying to AC71:
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By SXGuy
18th Dec 2020 06:38

Point being? Because some weren't entitled others shouldn't claim?

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Replying to SXGuy:
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By jonharris999
18th Dec 2020 07:55

@Hugo Fair You are quoting from the Round 3 guidance. The OP is asking about the earlier rounds.

I'm not sure how your point about "respect for others in worse positions" can be practically distinguished from a specious point about "law vs conscience". We are being asked a technical question here with a clear, straightforward answer.

If there is any iniquity here, as @AC71 has implied, it is that a huge number of people have not benefitted from something that many have benefitted from, many of them on the merest, most meaningless technicalities.

Short of becoming the PM or Chancellor yourself, there is nothing fair to be done but to work through each situation according to the rules.

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Replying to jonharris999:
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By Hugo Fair
18th Dec 2020 09:44

Mea culpa ... the direct quote was indeed from round 3 guidance. However you've caused me to reach back into the archives (the official gov.uk national archives) to check on the guidance for the previous two rounds, which can be found at https://webarchive.nationalarchives.gov.uk/20201020161723/https://www.go...

This still has the original opening that "HMRC expects you to make an honest assessment about whether your business has been adversely affected" ... and, whilst much of the wording is much woollier than recent tighter guidance, the examples given are all in one of two categories:
* you’re unable to work (because of specified circumstances), or
* you’ve had to scale down, temporarily stop trading or incurred additional costs (because of specified circumstances).

My note of caution (which is all that was intended) is highlighted by the further statement that "If you make a claim for the Self-Employment Income Support Scheme grant you’ll have to keep records of how and when your business has been adversely affected, and confirm to HMRC that your business has been adversely affected by coronavirus."

For the avoidance of doubt, I'm not deliberately pontificating for the pleasure of it - merely attempting to answer the OP's questions (to which as so often there is no single black-and-white answer), and proffering a warning as to the possible direction of travel by HMRC during the course of next year.

None of this means I believe that the OP has done anything "wrong", merely that the very nature of imprecise guidance is that HMRC has the opportunity to apply their interpretation after the event (something of course that they've never done before)!

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By Duggimon
18th Dec 2020 08:44

I think you're fine, I'd advise you to just ignore Hugo Fair, you were entitled to the grant by all the measures that were relevant at the time and all you need do now is ensure you report the income in your 2020/21 tax return.

HMRC have no legislative backing for pursuing you for repayment of them.

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By tom123
18th Dec 2020 11:22

You could only go by what you knew at the time, so you are fine.

No one can predict the future least of all now.

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By tom123
18th Dec 2020 11:22

You could only go by what you knew at the time, so you are fine.

No one can predict the future least of all now.

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By tom123
18th Dec 2020 11:25

You could only go by what you knew at the time, so you are fine.

No one can predict the future least of all now.

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By pauld
18th Dec 2020 14:36

Isn't it all a bit immaterial.

Look at the billions the Tories gave to their mates to provide non existent PPE at the start of the pandemic. Who's gonna care whether you claimed or not?

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By Nigel Henshaw
19th Dec 2020 08:42

You will be fine, however in similar conversations I have been having with clients I have been advising them to keep as full a record as possible of why exactly you made that decision at the time (eg cancelled contracts, having to close, emails, letters, a written note of a phone call etc) - I have a feeling that when your 20/21 figures are fed into Hector's big machine his eyes will light up when he sees that your figures are higher than 19/20, and he will press the "Enquire Letter" button, and in any enquiry they are bound to ask why you claimed.
Either that or his machine will say "sorry not enough staff for all these enquiries , no point"

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Replying to NH:
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By Hugo Fair
19th Dec 2020 10:54

Thanks ... exactly what I've been trying to say, albeit expressed more clearly and with better humour.

My concern is that too many people are relying on the "sorry not enough staff for all these enquiries" possibility, but HMRC's focus of attention is set by politicians who are not constrained by logic or fairness (and can always re-direct resources).

Politics is not a science but the art of perception ... and the perception of many MPs is that the typical self-employed person is someone "on the lump" (as it was known back in the frontier days of the 1970s) whose primary objective is to avoid paying taxes of any sort!

I'm certainly not in that camp, but warning that those who are often have the power to determine where to point tax-collecting resources (especially if they feel it will play well in their perceived constituency).

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