Over the last number months, the impact of COVID-19 on Irish businesses has been very evident. From mid-March, all Irish businesses will have felt some type of disruption, some more so than others but it’s fair to say that everyone has had to very quickly adapt in at least some way to the changing circumstances.

The Government along with the Irish Revenue Commissioners has announced a number of measures (both tax and non-tax) which have been designed to support businesses and individuals navigating through the crisis.

Outlined in this article is a high-level overview of some of the key measures that have been introduced including:

• Temporary Wage Subsidy Scheme
• Debt Warehousing
• Compliance measures

The support measures have been evolving over the last number of weeks and guidance continues to be issued in respect of the practical application of the measures, however, the information contained in this article is correct at the date of writing (10 June 2020).

Temporary Wage Subsidy Scheme

On Tuesday, 24 March the Government announced new measures to provide financial support to workers affected by the Covid-19 crisis. As part of these measures, Revenue is operating a Temporary Wage Subsidy Scheme (TWSS). The scheme, enables employees, whose employers are affected by the pandemic, to receive significant supports directly from their employer through the payroll system.

The operation of the scheme is provided for by COVID-19 legislation (Section 28 of the Emergency Measures in the Public Interest (Covid-19) Act 2020). Initially, the Scheme was set to last for 12 weeks from 26 March 2020. However, in early June, an extension to the Scheme was announced. The Scheme will run until the end of August 2020. Phase 1 was from 26 March until 3 May. Phase 2 is from 4 May to the end of the scheme.

The scheme is currently in Phase 2 – the operational phase. Under the operational phase, the subsidy paid to employers will be based on each individual employee’s Average Revenue Net Weekly Pay (ARNWP) and the gross pay as reported by the employer in the payroll submission. Revenue will calculate the employee’s ARNWP and provide this to the employer. The subsidy rates that apply since 4 May 2020 are illustrated in the table below.

Employees earned on average	Subsidy amount
Less than or equal to €412 per week	85% of ARNWP to a maximum of €350 per week
More than €412, and up to €500 per week	Flat rate of up to €350 per week
More than €500 and up to €586 per week	70% of ARNWP, subject to a maximum of €410 per week
More than €586 and up to €960 per week	New tiered arrangement to a maximum of €350 per week

The scheme is available to employers across all sectors excluding the Public Service and Non-Commercial Semi-State Sector. To qualify for the scheme a business must be experiencing significant negative economic disruption due to the COVID-19 pandemic.

Per Revenue guidance, eligibility for the Scheme will initially be determined largely on the basis of self-assessment and a declaration by the employer concerned. A key indicator is that there is to be an expected decrease in turnover by 25 per cent for Quarter 2, 2020. This decrease can be gauged by reference to Quarter 1, 2020 for example, or against another reasonable reference period.

Under the terms of the scheme, an employer can make an additional payment or ‘top-up-payment’ to their employee to fully or partially make up the difference between the amount provided by the subsidy scheme and the employee’s Average Net Weekly Pay. Such additional payment cannot be re-grossed, the payment is treated as gross pay and liable to Income Tax and USC according to the employee’s tax credits and rate bands.

Debt Warehousing

On 2 May 2020, Minister for Finance and Public Expenditure and Reform, Paschal Donohoe, TD, announced a number of additional supports for businesses affected by the COVID-19 restrictions which included the ‘warehousing’ of VAT and PAYE tax liabilities. The warehousing is to apply to businesses in all sectors of the economy who have been negatively impacted by COVID-19. The following details set out how the warehousing measures are intended to operate:

• COVID-19 related VAT and Payroll tax debts, due from 1 March 2020 to the date when sectoral restrictions are lifted, will be parked for a period of 12 months;
• no interest will accrue on the tax debts during the 12 month period
• thereafter, the COVID-19 related tax debts will carry a reduced interest rate of 3% (down from 10%), until the debt is paid
• the timeframe allowed to pay the warehoused debt will be flexible and determined by the ability of the business to pay both COVID-19 related debts as well meeting its ongoing tax liabilities as they arise in the normal course
• for the warehousing arrangement to apply, all returns must be filed in accordance with the Revenue guidance that has applied since the start of the current pandemic.

The operational details are being finalised and the necessary legislative amendments will be brought forward in Finance Bill 2020 according to the Department of Finance.

In order to avail of the scheme, the tax debt will have to be quantified through the filing of all relevant returns for the restricted trading phase. If a best estimate return of liability has been made for any period, the correct return will have to be filed to ensure the debt benefits from the warehousing.

Tax clearance status will not be impacted where a taxpayer avails of the debt warehousing. Refunds and repayments are expected to be paid in the normal manner, notwithstanding that the taxpayer has outstanding VAT and PAYE employer liabilities.

It is expected that the warehousing measures will apply automatically to SMEs who, according to Revenue’s definition, are those taxpayers managed by Revenue’s Business Division and with a turnover of less than €3 million. Other taxpayers dealt with by Large Corporates Division (LCD) or Medium Enterprise Division (MED), should contact the Collector-General to avail of the debt warehousing measures.

Compliance measures

Along with the TWSS and the warehousing of VAT and PAYE liabilities, Revenue has taken a number of steps to support business affected by the COVID-19 crisis. These include measures to reduce the cash flow impact of tax payments such as:

• Early payment of 2020 Research & Development tax credit instalments
• Prioritising the approval and processing of repayments and refunds, primarily VAT repayments and PSWT refunds
• The application of a surcharge for late CT1 Corporation Tax returns for accounting periods ending June 2019 onwards (i.e. due by March 23, 2020 onwards) is suspended
• Similarly, the application of a surcharge for late iXBRL financial statements for accounting periods ending March 2019 onwards (i.e. due by March 23, 2020 onwards) is suspended
• The processing of repayments and refunds will also be prioritised in the absence of iXBRL accounts for accounting periods ending on or after March 2019
• Relaxation of the rules in Section 1085(2) Taxes Consolidation Act 1997 which restricts reliefs, such as loss relief and group relief, when a Form CT1 is filled late

The overarching message from Revenue is to continue filling tax returns even if you are unable to pay the liability and to engage with Revenue.

Conclusion

The range of measures introduced by the Revenue and the Irish Government is unprecedented and, as noted above, has been changing with pace over the last number of weeks. Everyone is still learning how these measures will operate in practice, so it is critical for businesses and individuals to be able to keep up to date with those changes and what it means for them.

One way in which you can keep up to date is through the Institute’s COVID-19 hub. This contains up to date information on the measures discussed in this article. The site also provides a range of information on the non-tax measures.