Tax returns auto-corrected for SEISS grantsby
HMRC is automatically correcting tax returns where the total of declared SEISS grants don’t match what HMRC thinks the taxpayer has received, but those auto-corrections can be challenged.
As AccountingWEB reported in May, HMRC had to stall the processing of many 2020/21 self assessment tax returns where the return included, or should have included, a report of a self-employment income support scheme (SEISS) grant.
Processing of these 2020/21 returns resumed on 19 May 2021 when HMRC introduced a fix to prevent some tax returns being incorrectly flagged as containing errors relating to SEISS grants.
On 19 June 2021 HMRC set its computer to automatically correct 2020/21 tax returns received from that date, where the total amount reported of SEISS grants received in that tax year doesn’t match HMRC’s records. It will take HMRC some time to process all of the tax returns submitted before 19 June, as some manual intervention is required to adjust for SEISS grants.
HMRC has the power to correct a self-assessed tax computation for ‘obvious errors or mistakes’ within the return, without opening a formal tax enquiry. This correction should be done within nine months of the date the tax return is filed.
The taxpayer should receive a notice of this correction to their self assessment on a form SA302 and a covering letter from HMRC. The agent should also receive a copy of this notification.
What to do next
Your client is not obliged to accept this auto-correction to their tax return, and can reject it within 30 days of the date of the correction notice issued by HMRC. Any rejection should be made in writing to HMRC, rather than by phone, stating the reasons why you are rejecting it.
Before you examine the tax return correction you need to be certain about the amount of SEISS grant the taxpayer received. The best way to do this is to check the bank statements for the taxpayer for the year to 6 April 2021. Also ask your client if they have since repaid any of the SEISS grants received.
There are five circumstances which may have prompted the auto-correction, which require different reactions:
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