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New Code of Practice for Revenue Compliance Interventions

 

The Revenue Commissioners published a new Code of Practice for Revenue Compliance Interventions today which will be effective from 1st May 2022 and will apply to all compliance interventions notified on/after that date.  The revised Code applies to all taxes and duties, with the exception of Customs.

 

The revised Code reflects Revenue’s new Compliance Intervention Framework and the key changes include:

  1. A three tier designation of Revenue Interventions and

  2. The introduction of Risk Review categories of Intervention.

 

 

Level 1

Level 1 Interventions are aimed at assisting taxpayers to bring their tax affairs in order voluntarily.  They are designed to support compliance by reminding taxpayers of their obligations. They also provide them with the opportunity to correct errors without the need for a more in-depth Revenue intervention. These include the following:

  1. Self-reviews

  2. Profile interviews

  3. Bulk issue non-filer reminders

  4. Actions that fall under the Co-operative Compliance Framework.

 

 

The expected outcomes of Level 1 Interventions:

  1. Liability under relevant tax head(s).

  2. Statutory Interest

  3. Reduced penalties. In situations where self correction is an option, no penalties should arise.

  4. No Prosecution.

  5. No Publication.

 

 

 

In Summary:

  • Level 1 interventions can only occur where the Revenue Commissioners have not already engaged in any detailed examination, review, audit or investigation of the matters under consideration.

  • Examples include VAT verification check letters requesting backup documentation to support refund claims, reminder notifications in relation to outstanding tax returns, questionnaires for R&D Tax Credit claims, requests to self-review on specific issues, etc.

  • A Level 1 Intervention allows for an unprompted qualifying disclosure.

  • Unprompted qualifying disclosures cannot be made at any level other than Level 1.

  • The definition of a Profile Interview has changed in the new Code. A Profile Interview will now be used by Revenue to familiarise itself with a specific taxpayer.  Previously it was used to assess a set of taxpayer risks to ascertain whether or not a Revenue audit was required.

  • If the Revenue Commissioners identify a compliance risk during a Profile Interview, they may initiate a Level 2 or Level 3 intervention.

  • A Level 1 Compliance Intervention allows for (i) self corrections and (ii) unprompted qualifying disclosure.

  • When making an unprompted qualifying disclosure, it is essential to disclose the tax defaults for the tax heads and the tax periods which are the subject of the disclosure. To be completely compliant, the taxpayer must also include all previously undisclosed tax defaults in the ‘deliberate default’ category under any tax head and/or any tax period.

 

 

Important Change

According to the new Code, self-corrections can continue to be made the taxpayer is within the relevant time limits

From 1st May 2022 any such self-corrections must be made in writing.

The submission of an amended return on ROS will no be longer sufficient to qualify as a written notification.

Therefore, to qualify as a self correction, a written notification must be provided as well as any amendment made on ROS.

 

 

 

 

Level 2

One of the more fundamental changes to the revised Code is the introduction of the ‘Risk Review’ as a Level 2 Intervention. Level 2 interventions are used by Revenue to confront compliance risks ranging from the examination of a single issue within a Tax Return to a full and comprehensive Revenue Audit.  An ‘unprompted qualifying disclosure’ will not be available to a taxpayer who receives notification of a Risk Review in respect of the specified tax head and tax period.  Taxpayers will, however, have the option to make a prompted qualifying disclosure when notified of a Level 2 intervention.

There are two types of Level 2 Interventions:

  1. Risk Reviews

  2. Audits

 

 

 

 

Level 2 Interventions – Risk Review

  • A Risk Review is generally a desk based intervention which focuses on a particular issue or issues contained in a tax return or a risk identified by Revenue’s own system.

  • Unlike level 1 interventions, there is no option for a taxpayer to make a self-correction or an unpromoted qualifying disclosure once they have been notified of a level 2 compliance intervention.

  • A written notification will be issued to the taxpayer.

  • The notice will specify the scope of the tax review, outlining which information is to be provided within a twenty eight day period.

  • The notification will also clarify whether the intervention is a risk review or an audit.

  • The review will take place twenty eight days from the date of the notification.

  • Generally, Risk Reviews will be carried out by correspondence.

  • Taxpayers will have twenty one days in which to notify Revenue if they intend to make a prompted qualifying disclosure.

  • A prompted qualifying disclosure can be made within twenty eight days of a notification of a level 2 intervention, with the possibility of requesting an additional sixty days.

  • In circumstances where a prompted qualifying disclosure is made, it must be made along with the relevant tax and statutory interest paid, before the expiry of the twenty eight day period.

  • The prompted qualifying disclosure must include all underpayments in respect of that particular tax head for the period in question and not just the particular issue which is the subject of the Risk Review. If the taxpayer fails to disclose any underpayments at this point then it is likely that higher penalties could ensue along with an increased risk of publication on Revenue’s Tax Defaulters List.

  • A prompted qualifying disclosure may allow the taxpayer the opportunity to mitigate penalties, avoid prosecution and/or avoid publication on the tax defaulters’ list.

  • Failure to respond to the Risk Review Notification may result in an on-site visit by Revenue or a full Revenue Audit.

 

 

 

Level 2 Interventions – Revenue Audit

A “Revenue Audit” is an examination of the compliance of a taxpayer.  It focuses on the accuracy of specific tax returns, statements, claims, declarations, etc. Broadly speaking, the operation of a Revenue Audit will remain the same under the revised Code.  An audit will be initiated where there is a greater level of perceived risk.  Also, please keep in mind that an audit may be extended to include additional tax risks depending on information discovered by Revenue during the audit process.

The main stages in a typical Revenue audit are unchanged under the new Code and can be summarised as follows:

  1. The taxpayer receives a Notification Letter which confirms the type of compliance intervention to be undertaken as well as the tax head(s) and period(s) covered. The notice also contains the audit commencement date and location in addition to the books and records to be made available for inspection.

  2. The audit will commence twenty eight days after the date of the notification.

  3. It is possible for businesses to request an alternative date in circumstances where the commencement date is not feasible for them.

  4. A pre-audit meeting can be carried out, where necessary, to ascertain the nature and availability of electronic records.

  5. It is possible to make a prompted qualifying disclosure before the start of the Audit. In order to make such a disclosure, tax and statutory interest must be paid in full.  A penalty does not need to be included.  The taxpayer must sign a declaration that the disclosure is complete and correct.

  6. Taxpayers may request an additional sixty days in order to prepare a prompted qualifying disclosure. This must be done within twenty one days of the date of the Audit Notification.

  7. Opening meeting – At the start of this meeting, the Auditor explains the purpose of the audit and indicates how long it should take. At this point, the Taxpayer has the opportunity to make a prompted qualifying disclosure.  This meeting provides the taxpayer with the opportunity to demonstrate to Revenue the tax controls in place. The Revenue auditor will examine the books and records as well as the prompted qualifying disclosure, raise queries and interview the taxpayer.  The information and explanations provided by the taxpayer will define the focus areas of the audit as well as influencing its outcome.

  8. Revenue will meet the Taxpayer to outline the audit findings.

  9. If the tax return is correct, the taxpayer will be informed as soon as there is certainty. If, however, the return requires amendment, the Auditor will discuss this with the Taxpayer and provide written clarification.

  10. At the close of the audit there will be a final meeting to agree on the total settlement when the taxpayer should pay the required amount to the Auditor.

  11. Following on from the audit, assessments may be raised or actions carried out to recover additional or disputed tax liabilities, where necessary.

 

 

Level 3 Intervention

Level 3 interventions take the form of investigations. These would generally be focused on suspected tax fraud and evasion.  A ‘Revenue Investigation’ is an examination of a taxpayer’s affairs where Revenue believes that serious tax or duty evasion may have occurred.  As the Revenue investigation may lead to a criminal prosecution, it is always recommended to seek expert professional advice and assistance in such situations.

A taxpayer is not entitled to make a qualifying disclosure from the date of commencement of the investigation, however, a taxpayer can seek to mitigate penalties by cooperating fully with a level 3 intervention.

Taxpayers will generally be notified of a Level 3 intervention in writing.  However, in certain cases Revenue may carry out an unannounced visit or may carry out investigations without notifying the taxpayer in writing.

Just to reiterate, once an investigation is initiated, the taxpayer cannot make a qualifying disclosure in relation to the matters under investigation.

 

 

 

 

FINAL POINTS

The main changes in the new Code of Practice for Revenue Compliance Interventions are:

  1. The new Risk Review which is classed in the same category as a Revenue Audit. Once a taxpayer is notified of a Risk Review, the option of making an unprompted qualifying disclosure is removed.  This means the taxpayer will be subject to increased penalties and possible publication on the Revenue’s Tax Defaulters’ list.

  2. A Risk Review generally requires clarification of a specific tax related issue, however, in order for a prompted disclosure to qualify, the disclosure must cover all tax defaults in relation to that particular tax head and the period(s) outlined in the notification. If, however, the default is considered to be in the deliberate default category, the disclosure must cover all tax heads and all tax periods.

  3. There is a 28 day period between the date of the Notification and the commencement of the Risk Review or Audit.

  4. Under the new Code, where the tax underpayment or an incorrectly claimed refund is less than €50,000, publication on the Revenue’s Tax Defaulters’ list will not arise. This increased threshold relates to the tax liability only and does not include interest and/or penalties.

  5. Under the new Code, the exclusion from mitigation of penalties in relation to disclosures pertaining to offshore matters has been removed. This means the taxpayer can now include tax defaults relating to offshore matters in qualifying disclosures and benefit from mitigated penalties.

 

 

 

For full information, please click: https://www.revenue.ie/en/tax-professionals/documents/code-of-practice-revenue-compliance-interventions.pdf

 

 

 

 

To book an appointment to discuss any Revenue correspondence you may have received in relation to a Level 1, Level 2 or Level 3 Intervention, please email us at queries@accountsadvicecentre.ie

 

 

 

 

Please be aware that the information contained in this article is of a general nature.  It is not intended to address specific circumstances in relation to any individual or entity. All reasonable efforts have been made by Accounts Advice Centre to provide accurate and up-to-date information, however, there can be no guarantee that such information is accurate on the date it is received or that it will continue to remain so.. This information should not be acted upon without full and comprehensive, specialist professional tax advice.

 

VAT treatment of Cancellation Deposits

 

The VAT reclaim provisions contained in s74(4) VATCA 2010 have been abolished with effect from 1st January 2022.

 

From 1st January 2022, a key change in the Finance Bill 2021 has been introduced in relation to the VAT treatment of cancellation fees, including non-refundable or forfeited deposits, retained by business in the event of a customer cancellation.

 

Cancellation fees including forfeited deposits would be liable to VAT on the basis that they are either (a) a payment for a vatable service or (b) a right to access a vatable service. This is especially relevant to businesses in the tourism industry including hotels and restaurants.

 

In this amendment, it would appear that the Irish Revenue Commissioners are applying the CJEU judgements in:

  1. Air France–KLM C-250/14 and Hop!–Brit Air SAS C-289/14 and
  2. MEO C-295/17 and Vodafone Portugal C-43/19

 

They also appear to be following HMRC’s lead, which, with effect from March 2019, changed its legislation stating that VAT would remain due on retained payments for unused services and uncollected goods.

 

Prior to 1st January 2022 the Irish Revenue Commissioners had taken the view that if the supplier received a deposit from a customer that the deposit should be treated as an advance payment and VAT would be due when the deposit is received.  If, however, the supply didn’t proceed then the vendor/supplier could claim a repayment of the VAT on the deposit.  This was on the basis that the receipt of the deposit was not considered to be VATable because no supply of service had taken place.  In other words, prior to the amendment in the Finance Act 2021, if the actual supply didn’t proceed, the supplier or vendor could still claim a refund of VAT which it previously accounted for on receipt of the non-refundable deposit.

 

Pre 1st January 2022, a number of conditions were needed to apply:

  1. the supply didn’t take place because the customer has cancelled it.
  2. the cancellation was correctly recorded in the books and records of the supplier.
  3. the deposit was not refunded to the customer.
  4. the customer wasn’t given any other consideration, benefit or supply in lieu of that amount.

 

The Finance Act 2021 change has deleted from our legislation the previous entitlement of suppliers to reclaim a refund of VAT in respect of the non-refundable deposit, however, it does not affect the VAT treatment of deposits that are refunded to customers.  The VAT relief should still be available on those deposits.

 

For further information, please click: https://www.revenue.ie/en/tax-professionals/documents/notes-for-guidance/vat/vat-guidance-notes-fa2021.pdf

 

 

 

Please be aware that the information contained in this article is of a general nature.  It is not intended to address specific circumstances in relation to any individual or entity. All reasonable efforts have been made by Accounts Advice Centre to provide accurate and up-to-date information, however, there can be no guarantee that such information is accurate on the date it is received or that it will continue to remain so.. This information should not be acted upon without full and comprehensive, specialist professional tax advice.

Tax charge for non-Irish resident corporate landlords

 

Section 18 of the Finance Bill 2021 brings non Irish resident companies, in receipt of Irish rental income, within the charge to Corporation tax. Previously these companies were liable to income tax on their Irish rental profits.

 

Prior to the Finance Act 2021 amendment, non Irish resident companies, where no Irish branch existed, were liable to income tax at 20% on their rental income while Irish tax resident companies were, instead, liable to corporation tax at 25% on their rental income.

 

In circumstances where non-resident companies dispose of assets which had previously generated Irish rental income, any chargeable gains are now within the charge to corporation tax at 33% as opposed to capital gains tax, which is also at 33%. In other words, this amendment does not give rise to any additional tax as the effective rate of tax is 33% but the Corporate Tax rules now apply as opposed to the Capital Gains Tax rules.

 

There are no restrictions on the carry forward of rental losses and capital allowances in the change from the income tax regime to the corporation tax rules.

 

The payment date for certain affected companies’ preliminary corporation tax for 2022 has been adjusted. Those companies whose accounting period ends between 1st January 2022 and 30th June 2022 have until 23rd June 2022 to pay preliminary corporation tax in a further measure to ease the transition from the Income Tax to the Corporation Tax regime.

 

From today, non-resident corporate landlords will now also be subject to the new interest limitation rules which have been introduced to comply with the EU’s Anti-Tax Avoidance Directives. These new rules link the taxpayer’s allowable net borrowing/financing/leverage costs directly to its level of earnings.  The ILR does this by limiting the maximum tax deduction for net borrowing costs to 30% of Tax EBITDA.  In other words, the ILR will cap deductions for net borrowing costs at 30% of a corporate taxpayer’s earnings before interest, tax, depreciation, and amortisation, as measured under tax principles.

Update of COVID Restrictions Support Scheme – Expansion of supports for businesses impacted by COVID-19 restrictions

 

On 21st December 2021, the Government announced the expansion of supports for businesses impacted by public health restrictions that came into effect from 20th December 2021 to 31st January 2022 including changes to:

  1. the Employment Wage Subsidy Scheme (EWSS)
  2. the Covid Restrictions Support Scheme (CRSS) and
  3. the Debt Warehousing Scheme

 

A summary of the developments to the schemes is outlined below.

 

 

1. The Employment Wage Subsidy Scheme (EWSS)

On 9th December 2021 it was announced that the enhanced subsidy rates under the EWSS will continue until 31st January 2022.  In other words these enhanced rates will be paid in respect of payroll submissions which have pay dates in December 2021 and January 2022.

 

Today, Minister Donohoe confirmed that the EWSS will also be reopened for certain businesses who would not otherwise be eligible for the scheme.

 

Employers can re-join the scheme from January 2022 if they meet the following conditions:

  1. they previously claimed support under EWSS which they were correctly entitled to
  2. they anticipate that their combined turnover for December 2021 and January 2022 will be down by at least 30% as compared with their combined turnover for December 2019 and January 2020.
  3. for businesses established between 1st May 2019 and 31st December 2021 their average monthly turnover for December 2021 and January 2022 must be down by at least 30% when compared with the average monthly turnover across the period August 2021 to November 2021 or on a pro-rata basis in circumstances where the business was established during this period.
  4. The business must have tax clearance.

 

Employers who qualify for re-entry to the EWSS will receive support from 1st January 2022 onwards. These businesses can remain in the scheme until its expiry date of 30th April 2022.

 

Please bear in mind that the business must experience a 30% reduction in (a) turnover or (b) customer orders during a particular reference period to qualify.

 

Businesses that commence trading operations from 1st January 2022 onwards will not be eligible for the scheme.

 

For further information, please click: https://www.revenue.ie/en/corporate/press-office/budget-information/2021/crss-guidelines.pdf

 

 

 

2. The Covid Restriction Support Scheme (CRSS)

From 20th December 2021, the CRSS opens to businesses within the hospitality and indoor entertainment sector such as bars, restaurants and hotels as well as theatres and cinemas that are now required to close by 8pm each night until 31st January 2022.

 

The eligibility criteria regarding the reduction in turnover has also increased to no more than 40% of 2019 turnover.  Previously it was no more than 25% of the 2019 turnover.

 

Companies, self-employed individuals and partnerships that carry out a taxable trade can apply for the CRSS.

 

A qualifying person who meets the revised eligibility criteria can make a claim to Revenue in respect of each week that the eligible business/trading activity is affected by the imposed Covid restrictions.

 

A qualifying person who carries on such a business is eligible to make a payment claim under the Covid Restrictions Support Scheme if:

  • the weekly turnover from the relevant business activity in the claim period will be no more than an amount equal to 40% of the average weekly turnover in a reference period.
  • For most businesses the reference period will be 2019.
  • For businesses established between 26th December 2019 and 26th July 2021, the reference period will depend on the date on which the business was established.
  • the eligible business must have tax clearance for the relevant claim period and must intend to resume trading after the Covid-19 restrictions have been lifted.

 

For businesses established in the period between 13th October 2020 and 26th July 2021, they are eligible to apply for support under the scheme, however, they are first required to register for CRSS via ROS.  It will only be possible to make a claim once the business has an active CRSS registration.

 

If the eligible business meets the revised criteria to qualify for the scheme and has previously received CRSS payments in relation to a business premises carrying out a trading activity which was affected by the current public health restrictions, this business can make a CRSS claim using the ROS e-Repayments facility from 22nd December 2022.

 

Claims can be made in blocks of up to three weeks at a time.  The respective amounts due will be paid by Revenue in one single payment. The normal repayment period is three days from the date the claim was submitted.

 

In circumstances where a qualifying person carries on more than one eligible business activity from separate/different business premises, then it is possible to make a separate claim in relation to each trading /business activity.

 

If it’s possible for the business to reopen without having to prevent or significantly restrict access to it’s premises, then this business will not qualify for CRSS.  A business will not be eligible for the CRSS for periods where it chooses or decides not to open.

 

In situations where it is not feasible for a qualifying person to continue carrying on a relevant business activity during the period of restrictions, a claim for support under the CRSS can still be made.  This is on condition that the eligibility criteria have been met. In order to qualify, the person must have actively carried on the relevant business activity up to the date the latest public health restrictions were imposed and must intend to continue carrying on that same activity once those restrictions have been eased.

 

The weekly payment is calculated as follows

  • 10% of average weekly turnover up to €20,000 i.e. €2,000
  • 5% of average weekly turnover in excess of €20,000 up to a maximum of €60,000 i.e. €3,000
  • The maximum payment is €5,000 per week.

 

For the purposes of the CRSS, the “Average weekly turnover” is defined as:

  • the average weekly turnover in 2019 in the case of a business established before 26th December 2019,
  • the average weekly turnover between 26th December 2019 and 12th October 2020 in the case of a business established during that period, or
  • the average weekly turnover in the period 13th October 2020 to 26th July 2021 in the case of a business established during that period.

 

For further information, please click the link: https://www.revenue.ie/en/corporate/press-office/budget-information/2021/crss-guidelines.pdf

 

 

 

3. Debt Warehousing Scheme

The Revenue Commissioners have confirmed that November/December 2021 VAT liabilities and December 2021 PAYE (Employer) liabilities will be automatically warehoused for businesses which are already availing of the scheme.

 

The Government confirmed that the Covid restricted trading phase of the Debt Warehousing Scheme (Period 1) will be extended by three months to 31st March 2022 for taxpayers who are eligible for the COVID-19 support schemes. This effectively means that tax debts arising for such affected businesses in the first three months of 2022 can be warehoused.

 

The zero interest phase of the Debt Warehousing Scheme or Period 2 will begin on 1st April 2022 for those businesses and will run until 31st March 2023.

 

For further information, please click the link: https://www.revenue.ie/en/corporate/communications/documents/debt-warehousing-reduced-interest-measures.pdf

 

2% Digital Services Tax on UK based Crypto Assets Exchanges

 

 

HMRC issued it’s updated Digital Service Tax guidance material today in which it confirmed that cryptocurrencies are unlikely to meet the definition of financial instruments, commodities or foreign exchange and will therefore, not be exempt from the Digital Services Tax.  For further information, please click: https://www.gov.uk/hmrc-internal-manuals/cryptoassets-manual/crypto48000

 

This means that exchanges dealing in crypto assets will be subject to the 2% digital services tax on their revenue.

 

HMRC has confirmed that it will issue ‘nudge letters’ to known UK resident crypto-asset investors who it believes may have underpaid tax on their cryptocurrency transactions.

 

Therefore, if you have used, bought or sold crypto-assets between 6th April 2020 and 5th April 2021, you should check whether or not you have a reporting obligation to HMRC.

 

Although the letters are not being sent out to non-UK domiciled individuals, this does not mean that HMRC’s view on the situs tests for crypto-assets has changed.    For further information on the location of crypto assets please click: https://www.gov.uk/hmrc-internal-manuals/cryptoassets-manual/crypto22600

 

 

 

 

Revenue announces extension to ROS Pay and File deadline 2021

 

 

The Revenue Commissioners acknowledge the on-going efforts by taxpayers and agents and in light of the current Covid-19 developments, the Pay and File deadline for ROS customers has been extended to Friday, 19th November at 5.00pm.

 

 

For full information, please follow link: https://www.revenue.ie/en/tax-professionals/ebrief/2021/no-2112021.aspx

 

 

Digital Games Tax Credit

 

 

On 12th October 2021 the Irish Government announced the introduction of a Digital Games Tax Credit, i.e. a refundable Corporation Tax Credit available to digital games development companies.

 

On 21st October, Section 33 of the Finance Bill introduced section 481A TCA 1997 in relation to the new tax credit for the digital gaming sector which provides relief at a rate of 32% of the qualifying expenditure incurred in the development of digital games (i.e. the design, production and testing of a digital game) up to €25 million.

 

In other words, the credit of 32% will be on the lower of:

  1. 80% of the qualifying expenditure per project or
  2. €25 million per project

 

In order to qualify for the relief, the minimum expenditure per project is €100,000.

 

The digital gaming corporation tax credit will be available up to 31st December 2025.  

 

This tax credit is available to companies who are resident in Ireland, or who are EEA resident and operate in Ireland through a branch or an agency.

 

 

To qualify for this tax credit, the digital game must be issued with one of two types of Certificate from the Minister for Tourism, Culture, Arts, Gaeltacht, Sport and Media:

  1. An interim certificate which is issued to companies who are in the process of developing their game or
  2. A final certificate which is issued to companies who have completed the development of their game.

 

A digital games development company may not make a claim for the tax credit unless it has been issued with either an interim or a final certificate.

 

If a company has been issued with an interim certificate, it can claim the tax credit within twelve months of the end of the accounting period in which the qualifying expenditure is incurred.

 

Relief will not be available for digital games produced mainly for the purposes of advertising or gambling.

 

A digital game development company will be required to sign an undertaking in respect of “quality employment” which is similar to the requirements contained in section 481 TCA 1997 for tax relief for investment in films.

 

A claimant company will not be allowed to qualify for any additional tax relief under Section 481 Film Relief or the R&D tax credit.

 

As the credit will require EU state aid approval, it is to be introduced subject to a commencement order.

 

 

Please be aware that the information contained in this article is of a general nature.  It is not intended to address specific circumstances in relation to any individual or entity. All reasonable efforts have been made by Accounts Advice Centre to provide accurate and up-to-date information, however, there can be no guarantee that such information is accurate on the date it is received or that it will continue to remain so.. This information should not be acted upon without full and comprehensive, specialist professional tax advice.

EWSS Eligibility from 1st July 2021

 

The Finance (Covid-19 and Miscellaneous Provisions) Bill 2021 has extended the Employment Wage Subsidy Scheme (EWSS) until 31st December 2021.

 

It also amended the comparison periods for determining eligibility for EWSS for pay dates from 1st July 2021.

 

The main criterion for eligibility is that employers must be able to prove that they were operating at no more than 70% of either (a) turnover or (b) customer orders received for the period 1st January to 30th June 2021 as compared with 1st January to 30th June 2019.  It must also be able to clearly demonstrate that this disruption was caused by Covid19.

 

In other words, an employer must be able to show, to the satisfaction of Revenue Commissioners, that their business is expected to suffer a 30% reduction in turnover or customer orders, which was due to Covid19.

 

Simultaneously, Revenue introduced a new requirement for employers to submit a monthly Eligibility Review Form (ERF) on ROS.  The ERF requires (a) data relating to actual monthly VAT exclusive turnover or customers order values for 2019 in addition to actual and projected figures for 2021 for all relevant businesses as well as (b) a declaration.

 

The initial submission should be made between 21st and 30th July 2021 and by 15th of every month from August onwards.

 

On 15th of every month during the operation of this scheme, employers will be required to provide the actual results for the previous month, together with a review of the original projections they provided so as to ensure they continue to remain valid.

 

The eligibility for EWSS must be reviewed on the last day of each month.  If the business is deemed ineligible, then that business must de-register for EWSS from the following day.

 

If, however, the situation changes, then the business can re-register again.

 

The following subsidy rates, based on employee’s gross pay per week, will continue to apply for the months of July, August and September 2021 as follows:

  • €400 and €1,462 gross per week, the subsidy is €350
  • €300 and €399.99 gross per week, the subsidy is €300
  • €203 and €299.99 gross per week, the subsidy is €250
  • €151.50 and €202.99 gross per week, the subsidy is €203.

 

Additional Points:

  1. EWSS support is available for Employers with a valid Tax Clearance Certificate, providing they can demonstrate that the Covid-19 Pandemic disrupted their business resulting in a reduction in their turnover or customer orders by at least 30%.
  2. Childcare businesses which have been registered in line with Section 58C of the Child Care Act 1991, are not required to meet the 30% reduction in turnover or customer order test to be eligible.
  3. As and from 1st July, 2021, the eligibility criteria for the scheme will be calculated with reference to a twelve month period, as opposed to the six month period, as before.
  4. Revenue requires employers to retain appropriate documentation, including copies of projections, to demonstrate continued eligibility over the specified period.
  5. Employers must operate normal deductions of Income Tax, USC and employee PRSI from employees’ wages/salaries on all EWSS payments through the payroll. A reduced rate of employer PRSI of 0.5% applies in relation to wages/salaries which are eligible for the subsidy payment.
  6. If an employer fails to complete and submit the EWSS Eligibility Review Form, this will result in the suspension of EWSS subsidy payments by Revenue.

 

For further information please visit: https://www.revenue.ie/en/employing-people/ewss/how-to-claim-for-employees-and-subsidy-rates.aspx 

Finance (Covid-19 and Miscellaneous Provisions) Bill 2021 published 22nd June 2021

 

The Finance (COVID-19 and Miscellaneous Provisions) Bill 2021 was published today.

 

The provisions contained in the Bill include amendments to existing supports which were announced in the Economic Recovery Plan in addition to the introduction of the Business Resumption Support Scheme.

 

 

Reduced rate of VAT (9%) for the hospitality sector

Section 6 of the Bill amends section 46 VATCA 2010 to provide for the extension of the reduced 9% VAT rate until 31st August 2022 in relation to the following services:

  • Restaurant and catering services
  • Guest and holiday accommodation
  • Entertainment services to include admissions to cinemas, theatres, museums, fairgrounds, amusement park and sporting facilities
  • Hairdressing
  • The sale of certain printed matter including brochures, maps and programmes.

 

 

Employment Wage Subsidy Scheme (EWSS)

The Employment Wage Subsidy Scheme (EWSS) is a scheme that subsidises the cost of getting employees back to work.

The extension of the scheme should provide reassurance to businesses affected by the pandemic and enable them to plan for the months ahead.

 

Section 2 of the Bill amends the Employment Wage Subsidy Scheme (Section 28B of the Emergency Measures in the Public Interest (Covid-19) (No.2) Act 2020) to provide for the following changes:

  1. the extension of the Employment Wage Subsidy Scheme (EWSS) until 31st December 2021.
  2. the retention of the enhanced subsidy rates up to 30th September 2021.
  3. the retention of the qualifying criteria of a 30% reduction in turnover or customer orders threshold.
  4. An increase in the reference period to assess eligibility for the scheme from six to twelve months with effect from 1st July 2021.

 

 

Covid Restrictions Support Scheme (CRSS) 

The COVID-19 Restrictions Support Scheme (CRSS) was introduced by the Finance Act 2020.

It provided support for businesses which had to temporarily cease as a result of public health guidelines.

At such time as the affected businesses are allowed to re-open, those claimants will have to exit this scheme.

As some of those businesses will remain financially affected, the new measures introduced in the Finance (COVID-19 and Miscellaneous Provisions) Bill 2021 published today will extend the scheme. In addition, there will be an enhanced re-start payment for businesses exiting the scheme equal to up to three weeks at double rate of payment, subject to a €10,000 cap.

 

Sections 3 and 4 of the Bill amend the Covid Restrictions Support Scheme (CRSS) and provide for the extension of the specified period until 30th September 2021.

 

Section 4 of the Bill provides for the enhanced restart week payment scheme.  The level of payment a business may claim on reopening, following the restrictions, will depend on the actual date that business reopens.

  • For restart weeks between 29th April to 1st June 2021, the restart payment will equate to two weeks at double the normal CRSS rate subject to a cap of €5,000, being the maximum weekly amount.
  • For restart weeks between 2nd June to 31st December 2021, the restart payment will equate to three weeks at double the normal CRSS rate subject to a cap of €10,000, being the maximum weekly amount.
  • In all other cases, the standard rate of one week at the normal CRSS rate will apply, subject to a cap of €5,000, being the maximum weekly amount.

 

Please be aware:

  • According to Revenue’s guidelines, an eight week deadline applies to the submission of enhanced restart week payment claims.
  • A business can qualify for (a) the double restart week payment or (b) the triple restart week payment once.
  • The Minister for Finance has the power to extend this scheme to 31st December 2021 by order.

 

 

Business Resumption Support Scheme (BRSS)

Section 5 of the Bill includes a new section, section 485A TCA 1997, which makes provision for a new Business Resumption Support Scheme (BRSS)

 

The main features of the scheme are as follows:

 

  • BRSS is available for affected self-employed individuals and companies who carry on a trade, the profits from which are chargeable to Income Tax or Corporation Tax under Case I of Schedule D.
  • It is also available to persons who carry on a trade in partnership, and any trading activity carried on by charities and sporting bodies.
  • To qualify, businesses must be able to prove that their turnover is reduced by 75% in the reference period (i.e. 1st September 2020 to 31st August 2021) as compared with 2019 but it will be a later period if the business commenced trading on or after 26th December 2019.
  • Qualifying taxpayers will be able to claim an amount equal to three times the amount as derived by 10% of their average weekly turnover during the reference period (i.e. 1st September 2020 to 31st August 2021) up to a maximum of €20,000 and 5% thereafter subject to a cap of €15,000.
  • Please be aware that these payments will be treated as an advance credit for trading expenses.
  • If the business was set up before 26th December 2019 the claim will be calculated based on its actual average weekly turnover in the period starting on 1st January 2019. For example, if the business was established after 1st January 2019, then the claim will be based on the period from the actual commencement date up to 31st December 2019.
  • If the business was established between 26th December 2019 and 10th March 2020 the claim will be based on the actual average weekly turnover arising between the date of commencement and 15th March 2020.
  • If, however, the business activity commenced between 10th March 2020 and 26th August 2020 then the claim will be based on the actual average turnover generated between the date of commencement and 31st August 2020.
  • The individual, company or persons carrying on a partnership must have an up to date Tax Clearance Certificate in order to make a valid claim under this scheme.
  • They must also be VAT compliant.
  • They must not be entitled to make a claim under the CRSS Scheme in relation to any week that includes 1st September 2021 and the business must be actively trading, with the intention of continuing to do so.
  • Those making a claim must register on ROS and file a declaration that they satisfy the necessary conditions to avail of BRSS.
  • Please be aware that the names of BRSS claimants can be published on the Revenue’s website.

 

 

Stamp Duty measures for the cumulative purchase of ten or more residential properties

Section 13 of the Bill gives statutory effect to the Financial Resolution that was passed on 19th May 2021 and inserts section 31E in the SDCA 1999, thereby imposing a 10% stamp duty rate on the acquisition of certain residential properties (houses and duplexes but excluding  apartments) where an aggregate of ten or more units is acquired during a twelve month period by a single corporate entity or individual.

Section 14 of the Bill introduces a provision which provides for an exemption from the new 10% rate of stamp duty in situations where the residential units are leased to local authorities for certain social housing purposes.

 

 

Tax Debt Warehousing

Section 7 of the the Finance (COVID-19 and Miscellaneous Provisions) Bill 2021 inserts a new section 28D into the Emergency Measures in the Public Interest (Covid-19) Act 2020 which provides for the warehousing of EWSS overpayments received by employers.

Sections 8, 9 ,10, 11 and 12 of the Bill give effect to the extension of the Debt Warehousing Scheme for refunds of Temporary Wage Subsidy Scheme (TWSS) payments, Employer PAYE liabilities, Income Tax, VAT and PRSI:

 

This scheme will have three periods:

  • Period 1 (the “Covid-19 restricted trading phase”) will run from 1st July 2020 to 31st December 2021.
  • Period 2 (the “zero interest phase”) – will run from 1st January 2022 until 31st December 2022.  No interest will be levied on warehoused EWSS tax from Period 1.
  • Period 3 (the “reduced interest phase) –will run from 1st January 2023 until the relevant tax is repaid to Revenue. interest will be levied at a rate of 3% per annum on the Period 1 warehoused relevant tax, from 1st January 2023.

In circumstances where an employer does not meet the conditions for debt warehousing then (i) the zero interest and (ii) reduced interest rates will no longer apply.  Instead the 8% rate will be imposed.

 

 

 

For full and complete information, please follow the link: https://data.oireachtas.ie/ie/oireachtas/bill/2021/89/eng/initiated/b8921d.pdf

 

 

CRO update on filing date for annual returns

globe on newspaper2

 

The Registrar of Companies has decided to extend the filing deadline for companies with an Annual Return Date falling on 30th September 2020 or later  until Friday, 11 June 2021.

 

The extension of the deadline from 28th May 2021 was in recognition of difficulties being experienced when trying to file Annual Returns in the run-up to the filing deadline, which the CRO are currently working to resolve.

 

For further information, please click the link: https://www.cro.ie/en-ie/About-CRO/Latest-News/filing-extension?