Covid update
The Finance (Covid-19 and Miscellaneous Provisions) Bill 2022 was published on 4 March and is currently proceeding through the Oireachtas.
Wage subsidies
Section 2 of the bill amends section 28B of the Emergency Measures in the Public Interest (Covid-19) Act 2020 to extend the Employment Wage Subsidy Scheme (EWSS) and to allow for re-entry to the scheme for certain employers, following the introduction of new public health regulations on 20 December 2021.
CRSS
Section 4 of the bill amends section 485 of the Taxes Consolidation Act 1997 to extend the Covid Restrictions Support Scheme (CRSS) to businesses meeting certain criteria, given the impact of the public health regulations on the hospitality and indoor entertainment sectors.
The bill legislates for the revised eligibility criteria and the inclusion of new businesses, and certain charities and sporting bodies that meet the revised criteria.
Debt warehousing
Sections 5 to 10 of the bill give effect to government announcements extending the Debt Warehousing Scheme for businesses eligible for the Covid-19 support schemes.
The bill extends until 30 April 2022 the first period for which tax can be warehoused for employers with a Covid-19 entitlement.
A Covid-19 entitlement is an entitlement under a number of Covid-19 support schemes as listed in the bill. They include the EWSS and the CRSS, as well as various schemes administered by Fáilte Ireland, the Department of Transport, Enterprise Ireland, and the Department of Tourism, Culture, Arts, Gaeltacht, Sports and Media, along with any schemes with a similar objective that may be approved by Revenue.
The first tax debt warehousing period has been extended until 30 April 2022
Scarp
Revenue recently developed a dedicated Small Companies Administrative Rescue Process (Scarp) webpage, which includes published Revenue guidelines for process advisers appointed as part of Scarp.
Revenue debt is classed as ‘excludable debt’ under section 558L(4) of the Companies (Rescue Process for Small and Micro Companies) Act 2021. Revenue has the power to opt out of any debt reduction agreement under Scarp on the following grounds, as outlined in the published guidelines:
- if the company has failed at any time to comply with a requirement relating to tax imposed (examples include outstanding returns or a poor tax compliance history)
- if the company has an open Revenue audit or intervention
- if the company is party to an appeal in relation to a requirement relating to tax.
The guidelines also cover certain practical tax matters that the process adviser should consider when companies enter Scarp.
The Transborder Workers’ Relief concession ceased on 31 March 2022
Temporary concessions end
The Transborder Workers’ Relief concession, which applied for the period during which individuals were required to work from home due to public health restrictions arising from Covid-19, ceased on 31 March 2022.
Revenue’s temporary concession in relation to the close company surcharge on certain undistributed income will only apply to accounting periods ending up to 31 March 2022.
This pandemic-related concession provided that, on application, Revenue would extend by a further nine months the 18-month period during which a close company could make a distribution to avoid a surcharge in certain circumstances.
The normal close company surcharge rules will apply to accounting periods ending after 31 March 2022.
Revenue has updated its Covid-19 information webpage to reflect the changes outlined above.
Debt warehousing
Revenue has announced it will be issuing notices to all businesses using the Debt Warehousing Scheme. The notices are intended not only to provide businesses with certainty about their warehoused Covid-19 tax debts, but also to advise those with overdue tax returns that unless these returns are submitted by 30 April 2022, the business will lose the benefits of the scheme.
If a business loses access to the scheme, the debt that is currently parked will immediately become due for payment at 8% or 10% interest.
Revenue issues four types of notices, tailored to the circumstances of the business – eg whether or not the business qualified for the extension to the scheme announced last December and whether its tax returns are up to date.
Of €30bn in tax eligible to be warehoused, only €3bn is currently warehoused
Businesses that are fully up to date with their tax returns will receive a schedule of the debt that has been warehoused. Revenue will contact these businesses towards the end of this year (or in early 2023 if the business qualifies for the extension to the scheme) to put in place a tailored payment arrangement for its warehoused debts over an agreed timeframe.
This arrangement will take account of the financial circumstances of the business concerned, and a reduced rate of interest of 3% will apply for the duration of the agreed payment schedule.
Revenue’s notices to businesses with overdue tax returns list the specific returns that are outstanding, which must be filed by 30 April 2022. If any returns have been submitted previously on a ‘best estimate’ basis, then these must also be finalised by the 30 April deadline.
Most of these notices were issued by post, but some were issued to businesses via their ROS inbox.
Businesses that qualify for the extension to the scheme to 30 April 2022 and are up to date with their returns do not need to take any further action at this point. The notices they receive will confirm their eligibility for the extension.
The VAT and PAYE (employer) tax liabilities of such businesses arising between 1 January and 30 April 2022 will be automatically warehoused as the related returns are filed.
Revenue’s press release about these notices include preliminary statistics on the Debt Warehousing Scheme. These show that most businesses that qualified for the scheme have continued to pay their tax liabilities as they fell due or shortly afterwards.
Of the approximately €30bn in tax that was eligible to be warehoused only €3bn is currently warehoused.
While every effort has been made to ensure the accuracy of this information, no responsibility for loss or distress occasioned to any person acting or refraining from acting as a result of the material contained herein can be accepted by the Irish Tax Institute, authors, contributors or publishers. Professional advice should always be sought for your particular circumstances before acting on any tax issue.
