SEISS, CJRS and Eat Out to Help Out Overclaim Checks

HMRC retains statutory powers under Schedule 16 to the Finance Act 2020 to check and recover overclaimed SEISS, CJRS and Eat Out to Help Out amounts, and these checks continue well after the schemes themselves closed. HMRC compares claims data against later-filed tax returns, payroll submissions, VAT returns and till data to identify claims that look inconsistent with the actual trading position.

A check does not necessarily mean fraud is suspected; many overclaims arose from genuine misunderstanding of eligibility conditions that changed between rounds, or from calculation errors using the wrong reference figures. HMRC's approach and any resulting penalty depend heavily on how and when the recipient became aware of the issue.

Self-Employment Income Support Scheme grants required the claimant to be adversely affected by coronavirus, with different specific tests applying to earlier and later grants, and to have traded in the relevant tax years with self-employment profits meeting the scheme's thresholds. A common overclaim cause is a business that had reduced but not genuinely 'adversely affected' trade, or one that continued at a similar level despite the claim.

Later SEISS grants required a reasonable belief that trading profits would be significantly reduced, a test that some claimants applied loosely at the time. Reviewing the actual turnover and profit outcome for the relevant period against what was reasonably believed when the claim was made is central to assessing whether a genuine claim was made or an overclaim resulted.

Coronavirus Job Retention Scheme claims required furloughed employees to genuinely stop working, or reduce their hours under flexible furlough, for the periods claimed. A frequent HMRC finding is that an employee continued to carry out some work during a period claimed as fully furloughed, which is a compliance breach even where the employer did not intend to defraud the scheme.

Separately, calculation errors — using the wrong reference salary, reference period, or failing to correctly pro-rate for partial periods or flexible furlough — can create an overclaim even where the underlying furlough arrangement was genuine. Employers should check both the eligibility of the furlough arrangement and the arithmetic of the claim itself.

Eat Out to Help Out claims are checked against till records, VAT returns and other evidence of qualifying food and non-alcoholic drink sales during the scheme's operating days. HMRC compares the claimed number of qualifying covers and discount value against the business's other reported sales data for the same period.

Discrepancies often arise where a business claimed for sales that did not meet the scheme conditions, such as sales outside the qualifying days or times, or drinks not falling within the qualifying categories, rather than from a deliberate attempt to inflate the claim.

Where a claim exceeded entitlement, HMRC can raise an assessment to recover the excess. Separately, a penalty for failure to notify an overclaim can apply under Schedule 16 to the Finance Act 2020 where the recipient knew about the overclaim and did not tell HMRC within the applicable notification period, or knew about it before receiving the grant and did not adjust the claim.

The penalty position turns heavily on state of mind and promptness: a claimant who genuinely believed the claim was correct at the time, and who notifies and repays as soon as the error is identified, is in a materially different position from one who knew the claim was wrong and delayed telling HMRC.

Treat a Covid grant check like any other compliance check: read the opening letter carefully to establish exactly which claims and periods are being questioned, gather the contemporaneous evidence used to make the claim, and reconstruct the eligibility position as it stood at the time, not with hindsight.

Where the review confirms an overclaim, notify HMRC and arrange repayment promptly rather than waiting for a formal assessment; doing so before HMRC identifies the error itself can materially improve the penalty outcome compared with a prompted correction made only after HMRC's letter.