SELF-employed workers have been told to pay back Covid grants within 30 days or face hefty fines.
The Treasury believes some of those who received thousands of pounds in a pandemic support scheme were not entitled to it.
The demands follow a review of the Self-Employed Income Support Scheme (Seiss), which helped sole traders whose earnings were hammered by coronavirus.
It was similar to the furlough scheme for workers on PAYE, which paid 80 per cent of monthly salary.
To qualify, self-employed workers’ taxable profits could not be more than £50,000 in the 2019-20 or 2020-21 tax years, and they had to declare they had lost income due to Covid.
Five grants were paid from May 2020 to September 2021.
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Each installment was worth up to 80 per cent of average profits capped at £7,500, except the second grant which was capped at £6,750.
Now officials are demanding some of it back, claiming some applicants overstated their losses or had even stopped trading.
HRMC is writing to those it reckons were not entitled to the fourth and fifth grants or claimed too much.
They are warned to pay the money back within 30 days or face a penalty of 5 per cent of the amount that was overpaid.
Further penalties will be added after six and 12 months.
Eugenia Campbell, of accountancy firm RSM, said people could have made honest mistakes and should be given longer to find the money.
She said: “This is unfortunate timing for those already facing inflationary pressures.
“Most taxpayers would have made a Seiss claim in good faith, based on the information available to them at the time.
“Extending the repayment deadline to coincide with the 31 January 2023 tax return filing date would be a welcome reprieve from rising costs.”
HMRC has reportedly lost £11.8bn in fraud and overpayments from its Covid relief measures.
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Fraud alone accounted for a massive £6.5bn in the year to April 2022.
And as much as £17bn of the government’s £47bn of bounce-back loans for businesses will never be paid back.
