COVID grants provided to businesses from the furlough scheme, the self-employed scheme or Eat Out to Help Out are taxable. They need to be declared on the business’s corporation tax or income tax self-assessment return.
The grants paid out by HMRC need to be declared as the amounts actually received in the accounting period covered by the return, irrespective of the dates for which the grant was claimed.
If the HMRC computer cannot match the reported figure of grants on the tax return to the amount paid out to the business, it will issue a letter asking for an explanation.
Where you have received such a letter you need to either:
- submit an amended return that includes any omitted grant income; or
- confirm that all the grant income has been included as part of reported income on the return.
We can help you with this by compiling a reconciliation statement comparing the grants received to the figures in your accounts and tax return.
