Legislation underpinning the tax measures announced in the government’s stimulus package in July, designed to support the recovery of the Irish economy, was passed into law on 1 August in the Financial Provisions (Covid-19) (No. 2) Act 2020.
New payroll subsidy
The cornerstone of the package is a new Employment Wage Subsidy Scheme (EWSS) to replace the Temporary Covid-19 Wage Subsidy Scheme (TWSS), which ended on 31 August. The EWSS will remain in place until 31 March 2021 and operates as a payroll subsidy support scheme, rather than an income replacement measure.
The scheme is simpler than the TWSS and provides a flat-rate subsidy to qualifying employers based on the numbers of eligible employees on their payroll and their gross pay, subject to certain thresholds.
The primary qualification criterion is that the employer must demonstrate that they are operating at no more than 70% turnover for the period 1 July to 31 December 2020, when compared to the same period last year.
The employer must also hold and maintain tax clearance for the duration of the scheme.
Proprietary directors who meet the conditions in Revenue guidance also qualify for the EWSS.
Some employers qualified for early entry to the EWSS and could claim a subsidy for certain employees on their July and August payroll. This was limited to new hires and seasonal workers or for new employers.
A Revenue ‘sweepback‘ for July/August, that is a file upload and subsidy payment process, went live on 15 September and employers can submit sweepback files up to 14 October.
The Department of Employment Affairs and Social Protection (DEASP) has published a useful clarification in relation to employees placed on a reduced working week, due to Covid-19.
Employees may claim part-time jobseeker payments or Short-Time Work Support payments for days of unemployment, even where their employer is claiming the EWSS for days of employment.
Unemployment support
The Covid-19 Pandemic Unemployment Payment (COVID-PUP) has been extended to 1 April 2021 and will remain open to new applicants until the end of 2020. The amounts paid are being gradually reduced over time, with the rate dependent on the pre-pandemic earnings of the claimant.
Debt warehousing
The debt warehousing arrangement allows a business to park unpaid VAT and PAYE (employer) tax debts that arose from the Covid-19 crisis for a period of 12 months after a business resumes trading. No interest will accrue during this period, and an interest rate of 3% per annum will apply on the repayments after that date.
The date on which a business is deemed to resume trading is when the business ceased to be subject to restrictions provided for in regulations detailed in the Roadmap for Reopening Ireland (plus two additional VAT months).
If a business recommenced trading at a later date, they must be able to demonstrate this to Revenue’s satisfaction.
The 3% reduced rate of interest will also be available on other tax debts provided that the business submits any outstanding returns and enters into a Phased Payment Arrangement (PPA) with Revenue on ROS on or before 30 September 2020.
Businesses that had an existing PPA in place will also benefit from the reduced rate of interest.
Taxpayers with tax debts not covered by the debt warehousing arrangement will not qualify for a tax clearance certificate unless they have agreed a phased payment arrangement with Revenue.
Absence of tax clearance will preclude a business from availing of the EWSS, the Stay and Spend Scheme, accelerated loss relief and other measures, so businesses that miss the 30 September deadline will need to make other arrangements with Revenue to pay outstanding debts, at the normal rates of interest of 8% (for non-fiduciary tax) and 10% (for fiduciary taxes).
Stay and Spend
Taxpayers who spend a minimum of €25 on accommodation, food and non-alcoholic drinks between 1 October 2020 and 30 April 2021 can avail of a tax credit of 20% of the amount spent (up to a maximum refund of €125 per taxpayer, or €250 per jointly assessed couple). The Stay and Spend relief will be claimed on the individual’s income tax return.
Businesses wishing to register for the scheme must be VAT registered and hold tax clearance.
Loss relief measures
As a temporary measure for 2020, self-employed individuals may claim to have their 2020 losses and certain unused capital allowances carried back and deducted from their profits for 2019, thus reducing the amount of income tax payable in relation to their 2019 profits.
There is a €25,000 limit on the total amount that may be carried back. An interim loss relief claim can be submitted, before the results for 2020 will be known.
Companies that have incurred or expect to incur a trading loss in an accounting period that includes some or all of the period from 1 March 2020 to 31 December 2020 can accelerate their loss relief claims for 2020 and also submit an interim claim for relief.
Pay and File
Revenue announced an extension to the ROS income tax Pay and File deadline from Thursday 12 November to Thursday 10 December 2020, following representations on the challenges for practitioners in submitting all returns by the income tax filing deadline. This extension also applies to CAT returns with valuation dates ending in the year to 31 August 2020.
It is important to note that the ROS extended deadline is only available to taxpayers who both pay and file through ROS. Where only one of these actions is completed through ROS, the extension does not apply and the required date to submit both return and payment is no later than 31 October 2020.
Local Property Tax
Minister for Finance Paschal Donohoe has decided to defer the valuation date for Local Property Tax (LPT) from 1 November 2020 to 1 November 2021. This means that taxpayers will not be faced with increased LPT bills for 2021. The deferral of the valuation date will be given effect by a ministerial order under the Finance (Local Property Tax) Act 2012, as amended.
Brexit update
The government published its Brexit Readiness Action Plan and a General Scheme of the 2020 Brexit Omnibus Bill on 9 September. The Action Plan outlines changes that will occur, regardless of the outcome of the ongoing EU-UK negotiations, and aims to provide advice on steps that businesses need to take now to prepare for the end of the transition period on 31 December 2020.
The General Scheme of the Omnibus Bill addresses complex issues that will arise at the end of the transition period, including tax issues. At the time of writing, work is under way across government departments on drafting the bill, which will be brought before the Oireachtas in the coming weeks.
The government has also announced two new programmes to help businesses prepare for new customs and trading arrangements. A Ready for Customs grant is available from Enterprise Ireland for businesses that hire or deploy staff to a dedicated customs role.
In addition, Skillnet Ireland is offering free online customs training to support the customs intermediary sector and businesses that move goods frequently to, from or through Great Britain.
Revenue has also intensified its engagement campaign, writing to approximately 90,000 businesses that will be immediately impacted by Brexit from 1 January 2021. The letters set out a checklist of critical Brexit preparation steps, from registering for customs by obtaining an Economic Operators Registration and Identification (EORI) number, through to a cashflow and financial analysis to be ready for customs tariffs.
In addition, cross-governmental Brexit information webinars are being live streamed on 5 and 6 October.
