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Beware taxman’s checks on coronavirus support 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.

Clarity

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

“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.

Farmers need to be sure they have their records in good order… and have evidence to support valid 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 if later scrutinised.”

While the government website gives some basic examples of where a claim is valid, every business will be uniquely affected by coronavirus. For some the impact has been devastating, whilst others may have concluded that despite practical challenges their business has not been impacted enough to make a claim.

Checks

There is growing pressure on HMRC to check the validity of claims across all sectors and an understandable desire to make sure publicly-funded support has gone only to those businesses and individuals who meet the relevant criteria.

Mike said: “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. The consequences of not doing so could be severe.”

Farmers may also want to check if any fee protection insurance they have chosen to take out covers the costs of their accountant supporting with any enquiries relating to coronavirus claims.

“In the case of PKF Francis Clark clients who have our cover, they will take comfort in knowing that our costs in supporting them to deal with an enquiry by HMRC are covered,” added Mike.

For more information about the range of support available, visit our Coronavirus Updates hub.

FEATURING: Mike Butler
Mike joined PKF Francis Clark as a partner in 2019, bringing with him nearly 30 years of experience in the profession. As an experienced senior… read more
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