HMRC set to scrutinise coronavirus grant claims

FARMERS are being warned to ensure all claims for coronavirus support can be justified, to avoid falling foul of potential checks by HM Revenue & Customs.

Many agri-businesses adversely affected by the pandemic have taken advantage of measures including the Coronavirus Job Retention Scheme (CJRS) and the Self-Employment Income Support Scheme (SEISS), as well as Coronavirus Business Interruption Loans (CBILs) and generally smaller Bounce Back Loans.

There are growing indications that the validity of these claims will be reviewed, amid reports that the Government intends to grant tax officials new powers in an effort to claw back illegitimate or unnecessary grant payments.

With the deadline for the first round of SEISS grant applications looming on July 13, Mike Butler, partner in the specialist rural team at chartered accountants PKF Francis Clark, is urging farmers not to treat the scheme as “free money”.

“Unfortunately there is no specific clarity as to how much a business needs to have been adversely affected to make a claim and the risk is that this may be open to variations in interpretation, which could leave claimants exposed in any review of their claims by HMRC,” he said.

“Farmers who have taken advice will be aware of the need to make sure their claims can be justified in case there is a check by the taxman.

“Others may have claimed without careful consideration of their eligibility and will need to consider if they are able to prove they have been adversely affected enough to justify their claims.

“With applications opening in August for a second round of SEISS grants for businesses adversely affected from July 14 onwards, farmers will need to reassess their eligibility before claiming.

“For example, beef prices have recovered and are currently higher than pre-lockdown levels, so in that sector it may be more difficult to justify a claim.”

Mr Butler added: “We do not know the exact method any review by HMRC will adopt, but as some of the support payments are taxable, including SEISS grants, we anticipate any amounts received may need to be separately disclosed on self-assessment forms, enabling the taxman to focus on those who have made claims.

“Therefore, farmers need to be sure they have their records in good order, just like the rest of their tax affairs, and have evidence to support valid claims.”