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SEISS claim ineligible but taxpayer confused by guidance | accountingweb
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SEISS claim disallowed despite misleading guidance

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A film editor who claimed self-employment grants based on an ambiguous HMRC email received sympathy but still had to return the payments.

11th Apr 2023
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Thomas Merlin Ash was a self-employed TV and film editor until August 2018, when he incorporated into a company limited by guarantee.

Ash claimed two Self-employment Income Support Scheme (SEISS) grants in May and July 2020 of £7,500 and £6,570 respectively. Astute readers may have already spotted the issue Ash was about to encounter…

Invitation to make a claim 

In May 2020 Ash had received an email from HMRC headed: “Reminder – claim self-employment support” and explaining the process by which he could claim under the scheme. On visiting the gov.uk website, Ash was told: “You are eligible to make a claim.”

Ash worked through the steps and made the claim, followed by another several months later.

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Replies (14)

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By Hugo Fair
11th Apr 2023 13:45

The headline "SEISS claim disallowed despite misleading guidance" is itself somewhat misleading!

"The FTT .. had two matters to consider: was the HMRC assessment valid and, if so, were the remaining arguments outside their jurisdiction?
The FTT quickly cleared up the first point. Ash was not entitled to the SEISS payments received, as he had not been trading at the relevant time. Further, HMRC had correctly assessed the amounts to be repaid under the timeframes set out by s34 TMA 1970. The assessments were therefore valid."

But "Ash’s appeal was unusual, as he accepted he was not in fact eligible for the SEISS payments, but nevertheless believed he should be allowed to keep them."
So the claimant wasn't questioning the point on which the FTT 'found' in HMRC's favour!

And "Regarding these three submissions (which the FTT considered that Ash was making), the FTT agreed that it had no jurisdiction. The fact that the assessments were correctly issued was therefore sufficient to dispose of the appeal in HMRC’s favour."

So ... having made a finding on a matter which the claimant hadn't disputed and then going on to say that they had no jurisdiction to rule on what the claimant *was* claiming, the whole exercise was a tie between a farce and a stitch-up - certainly not what the title here leads one to believe.

Thanks (7)
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By Winnie Wiggleroom
11th Apr 2023 14:37

"Ash’s appeal was unusual, as he accepted he was not in fact eligible for the SEISS payments, but nevertheless believed he should be allowed to keep them."

Hilarious, is this a wind up?

Thanks (5)
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By Paul Crowley
11th Apr 2023 14:44

No sympathy from me
Lots of stuff about directors of companies being left out of SEISS
It would be interesting to follow whether director claimed CJRS
If the accountant was proactive, claimant would have known the rules.
I wonder if this will be the first of many

Thanks (8)
Replying to Paul Crowley:
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By justsotax
12th Apr 2023 13:50

why would the accountant need to be proactive, his client was not entitled to SEISS, and of course the Revenue made sure accountants could not be involved in that process so why would the accountant need to undertake any actions....

Thanks (7)
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By GHarr497688
11th Apr 2023 19:30

Well I understood and any client claiming in error was notified. I can't understand how he could get it wrong to be honest.

Thanks (4)
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By Tom+Cross
12th Apr 2023 09:53

"Much Ado About nothing" was also a comedy.

In this case; of errors.

Thanks (2)
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By sammerchant
12th Apr 2023 10:00

He would have been quids better off supplying HM Government with PPE!

Thanks (1)
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By Ian McTernan CTA
12th Apr 2023 10:03

An important lesson to highlight here: HMRC website, guidance etc are not fit for purpose and they expect lay people to read and understand dozens of pages and then disqualify themselves despite HMRC's own website telling them they are eligible.

HMRC should also have been taken to task for excluding agents from the process.

But this case was doomed to failure from the start.

Thanks (12)
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By Mr J Andrews
12th Apr 2023 10:04

Other unusual aspects to this article:-
~ HMRC using emails
~ Ash's accountant advising {arguing} that Ash wasn't aware of a key feature which meant a doomed
claim. Pity this wasn't spelt out beforehand to avoid such a waste of time.

Thanks (1)
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By Retrocanary
12th Apr 2023 11:24

This is what happens when HMRC actively try to exclude agents from a process. This could possibly have been avoided had agents been permitted to process the claims, as it would surely have been obvious to the agent that the client was ineligible.

Thanks (4)
Grace Heathfield
By Grace Mock
12th Apr 2023 12:08

I had a client do this. He phoned to ask if he could claim, and I advised not because of his incorporation. He went ahead anyway, ignoring my advice in favour of the promising information from HMRC - in the face of no income during Covid, I couldn't blame him. I seemed to be saying that HMRC was wrong and who would have thought that possible? He maintained he answered the questions honestly, but I'm pretty certain that he must have said he was still trading when he wasn't simply because in his head he WAS still trading, just as a limited company. He has to pay it back, but it solved his cash flow issues at the time.

I have quite a few of these clients and they will say things like "I was a sole trade but I'm a limited company now", which is impossible, but try explaining that to someone who isn't interested.

Thanks (7)
Replying to Hut15:
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By Karen@
12th Apr 2023 14:11

I also had clients do the same, and all said 'but HMRC invited me to make a claim so I assumed I was entitled to it'
As someone has already said, if agents were allowed to help with this (although we had more than enough extra work!) it probably wouldn't have happened!

Thanks (4)
DougScott
By Dougscott
13th Apr 2023 08:30

We all know HMRC guidance is frequently misleading and sometimes straight incorrect so any sensible accountant will be aware of the underlying tax law. Of course the simple taxpayer doesn't stand a chance if they try and do it themselves.

Thanks (1)
By Duggimon
17th Apr 2023 09:28

He might argue, and the FTT might agree, that the HMRC guidance in the letter was misleading but the fact remains that he did not correctly answer the questions he was asked in the process of making the claim.

He is somewhat fortunate that there was a lenient view taken of the misrepresentations made in the process of securing the grants, perhaps an acknowledgement that restricting the process so that only laypeople could make claims was an error on HMRC's part.

Thanks (0)