As businesses are dealing with severe disruption as a result of the COVID-19 pandemic, the Government and Revenue have introduced several measures to mitigate the effects.
We have highlighted some of the key points below under the following headings:
1. Temporary COVID-19 Wage Subsidy Scheme
2. Support for SME’s
3. Taxpayers in Revenue’s Medium Enterprise or Large Case Divisions
4. General Measures for individuals and companies
1. Temporary COVID-19 Wage Subsidy Scheme
This scheme enables employers who are adversely affected by the pandemic, to receive support from the State which will allow them to retain their employees on the payroll. The scheme is currently expected to last 12 weeks from 26 March 2020. The Scheme essentially operates by permitting employers who satisfy certain conditions to obtain subsidies of up to 70% of a specified employee’s net remuneration. The Scheme is administered by Revenue who have issued guidelines on the matter which are updated regularly https://www.revenue.ie/en/corporate/communications/covid19/temporary-covid-19-wage-subsidy-scheme.aspx
The scheme is operating in a transitional phase until 4th May. The Minister for Finance, announced further enhancements to the scheme on 15th April.
Qualifying Employer - The employer must be able to demonstrate to the satisfaction of Revenue:
The claim for the subsidy works on a self-assessed basis. Revenue advises employers to retain evidence of their eligibility for the scheme as compliance checks will be carried out after the scheme ends.
It applies to employees who were on the employer’s payroll as at 29 February 2020 and for whom a payroll submission has been made to Revenue in the period from 1 February 2020 to 15 March 2020.
After the scheme has expired, the names of all employers operating the scheme will be published on Revenue’s website.
Subsidy - Transitional Phase
The subsidy is calculated on an employee by employee basis as follows:
No subsidy is available where the average net weekly pay is greater than €960.
The subsidy is calculated by reference to the employee’s average net weekly pay for January and February 2020.
Subsidy - Next Phase
In May, the scheme will move to a subsidy payment based on 70% of the weekly average net (after tax) pay for each employee up to a maximum of €410 – further guidance is issuing from Revenue on a regular basis.
New subsidy rates will apply to ensure that the scheme adequately rewards lower paid workers.
With effect from 16 April 2020, the subsidy is available to employees where their pre-Covid 19 salary was greater than €76,000 and their post Covid salary has fallen below €76,000 subject to tapering to ensure that their net pay does not exceed €960 per week. Further Revenue guidance on the practical impact of this change is expected over the next few working days.
Income tax, USC and employee PRSI are not applied to the subsidy – the employee will be taxable on the subsidy amount paid to them by review at year end. In practice, this is likely to mean that the employee’s 2021 or 2022 tax credits may be reduced to discharge any tax owed on the subsidy.
Employer’s PRSI at 0.5% is applied to any top-up payment made by the employer over the subsidy.
2. Support for SMEs
A SME is a business with turnover of less than €3 million that is not dealt with by either Revenue’s Large Cases Division or Medium Enterprises Division.
Set out below is a summary of the key Revenue advice and support to help SME businesses experiencing cashflow and trading difficulties as a result of Covid-19:
Tax Clearance - The current Tax Clearance status will remain in place for all businesses over the coming months.
Debt Enforcement - All Revenue debt enforcement activity is suspended until further notice.
Statutory Interest - The application of interest on late tax payments is suspended for January/February 2020 and March/April 2020 VAT periods and for the February, March and April 2020 PAYE (employers) periods.
RCT - The RCT rate review scheduled to take place in March 2020 is suspended.
Tax Returns in General - Businesses are advised to file their tax returns on time, even if payment of the resulting tax liabilities, in whole or in part, is not possible.
Corporation Tax Returns - The application of a surcharge for late CT1 Corporation Tax returns and iXBRL financial statements (where applicable) for accounting periods ending June 2019 onwards (i.e. due by March 23, 2020 onwards) is suspended until further notice.
3. Taxpayers in Revenue’s Medium Enterprises Division (MED) or Large Cases Division (LCD)
Where client’s tax affairs are dealt with by either Revenue’s MED or LCD and the business is experiencing cash flow difficulties as a result of COVID19, the taxpayer is encouraged to engage with their Revenue contact should they wish to seek a full or part deferral of current tax liabilities.
Revenue in conjunction with the Office of the Collector General are considering taxpayer applications on a case by case basis (there is a template to be completed). We are actively assisting a number of clients in this regard.
Revenue insist on all Tax Returns being filed on time in order to be eligible for any relief available.
4. General Measures
Revenue have announced several further measures as follows:
Tax Refunds – Revenue are to prioritise the processing of tax payments and refunds.
Revenue Interventions – Revenue audits and other interventions are to be suspended. Where there is an open intervention, Revenue are to engage with the taxpayer to finalise their enquiries.
Local Property Tax - The payment date of LPT for 2020 paid by Single Debit Authority payment has been changed from 21 March 2020 to 21 May 2020.
Benefit in Kind - Revenue have also announced a relaxation of a number of benefit in kind rules which are fully outlined on the Revenue website (link below) https://www.revenue.ie/en/corporate/communications/covid19/compliance-with-certain-reporting-and-filing-obligations.aspx.
These measures include the non-application of benefit in kind on the provision of equipment to allow employees work from home, a relaxation of the rules regarding the annual €500 small benefit exemption and amendments to the benefit kind rules regarding the provision of company cars.
While our office premises are closed, Warren & Partners remains open for business and we are here to support you and your business through this challenging period. Please contact us for further advice on any of the above issues.
Please note: The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act upon such information without appropriate professional advice after a thorough examination of the particular situation.
Warren & Partners are a boutique Irish tax and business advisory firm based in Ballsbridge, Dublin. Our experienced-team of tax advisors will create unique tax solutions for your specific business needs.