SEISS was designed by the government to provide assistance to individuals whose business has been affected by the ongoing COVID-19 crisis. Through a series of grants, four in total by the scheme’s scheduled close, eligible people can expect to receive a proportion of their average trading income to provide them with the financial support they need. However, self-employed people are now being warned they must declare COVID-19 grants in future tax returns.
This issue is being particularly stressed, as a survey found many thought they would not have to include this information.
Research undertaken by GoSimpleTax, showed 46 percent of sole traders said they did not believe this information was necessary to include.
However, a failure do to so could mean HMRC hands down penalties for failing to include all sources of income.
Under current HMRC rules, any government support received during the pandemic must be included in 2020/21 tax returns.
READ MORE: Inheritance Tax UK: Britons feel ‘disgusting’ tax should be abolished
“Firstly, you should complete your 2019/20 tax return and submit it to HMRC as soon as possible.
“You can also start compiling your 2020/21 tax return. This will give you a good understanding of next year’s potential tax bill, so you have plenty of warning and less chance of unexpected costs.”
Taking steps to prepare for the next tax return, such as getting together documents and making notes, is likely to make the process less arduous.
But as all types of emergency financial support, such as the Small Business Grant Fund are also included, it will be important to keep track of all support received and declare this.
These grants are subject to Income Tax and Self-Employed National Insurance and so must be declared.
Mr Parkes added: “Under the current system, HMRC will allow you to submit your tax return and then make a resubmission before the next filing deadline of the year after.
“For example, if you’re submitting a tax return on January 31, 2021, you have until January 31, 2022 to amend anything you need.
“After this period of time, you’ll need to write to HMRC to explain the circumstances and request a change.”
Recently, HMRC has said if a person provides a ‘reasonable excuse’ as to why they have been unable to meet this month’s January 31 deadline, penalties will be waived.
The Revenue said it has understood the impact of COVID-19 on many, and the additional challenges they may face.
But customers will be required to file as soon as possible after the date.
Mr Parks concluded: “Despite is announcement to waive penalties for people who file late tax returns due to coronavirus, it’s fair to say that HMRC frowns upon deliberate errors and lateness.
“When it comes to submitting your Self Assessment tax return, it’s crucial that you are prepared, organised and understand fully what it is HMRC is looking for.”