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current world economic outlook

As we open up, what is the Economic Outlook?

There are a great many ways in which the Covid-19 emergency has affected the world we now live in. Our day-to-day lives have been irrevocably changed and everything from our daily habits to how we view and manage our mental wellbeing will likely be different going forward. Something which has been a concern for both business owners and employees is the notion of what state the economy will be in following this emergency, on both an Irish and a global scale. Today we will be taking some time to focus on the current world economic outlook following the recent World Economic Outlook press briefing this month and to share some of the current findings with all of our clients and friends.

The IMF has said that: “We are now projecting a stronger recovery for the global economy compared with our January forecast, with growth projected to be 6% in 2021 and 4.4% in 2022 after an estimated historic contraction of -3.3% in 2020.”

Which, despite some obvious issues in the coming months, and the uncertainty of these projections, is a positive outlook to look forward to, from 2022 onward. It is projected that some jobs lost in the pandemic will not be retrieved and this is likely to change the landscape of the global workforce going forward.

Chief Economist and Research Director Gina Gopinath has given some additional hope for the global economic outlook following on from the Covid-19 pandemic, stating that “even with high uncertainty about the path of the pandemic, a way out of this health and economic crisis is increasingly visible. Thanks to the ingenuity of the scientific community, hundreds and millions of people are being vaccinated and this is expected to power recoveries in many countries later this year.”

The idea of ‘secular stagnation’ is one that is important to bear in mind at the moment as economies have found themselves stalling in the midst of global lockdowns. This is a period of little or no economic growth, which is something we have experienced in recent months. Harvard Professor Lawrence Summers suggested in 2013 that these periods assisted in inflation dropping below 2% in Europe, the UK and the US. It can be argued that previous periods of secular stagnation have paved the way for this current emergency to be financially navigated with a positive slant, and for modern economies to come out of this period in a positive light.

Naturally, once global lockdowns begin to lift, economic activity will begin to massively improve but it remains to be seen how impacted the global economy will be by the previous year of emergency. Now is a time to take a longer-term view of the economy and to look forward to a rapid recovery for both our local and the global economy, with all involved keen to avoid another massive financial crisis. The economic rebound from Covid-19 is expected to be strong, with different countries naturally at different stages of their recovery and the UK expected to largely lead this recovery. These projections are naturally reliant on the virus itself as the economy is likely to follow the lead of the virus in that continued vaccine success will propel economic growth, while a continued pandemic and increased variants would slow the economic recovery significantly.

 

We hope that this information has been useful for you and as always, please don’t hesitate to contact us here at EcovisDCA where we remain open and ready to help.

Pandemic Unemployment Payment

Pandemic Unemployment Payment (PUP) 

2020 payments received: 

Payments received in 2020 under the Pandemic Unemployment Payment (PUP) are subject to income tax and universal social charge.

Individuals in receipt of PUP payments must complete an income tax return to receive their final statement of liability which will provide the final over or under payment for the year.

Revenue confirmed in September 2020 that PUP income tax and USC liabilities would become due at the end of 2020 and that the resulting liabilities could be discharged in one of two ways;

–    Pay any underpayment in full via My Account

or

–    Default option of discharging any underpayment arising due to the PUP payments over a four year period commencing in 2022 via a reduction in the annual tax credit entitlement.

As an example – Individual A has a €1,000 income tax underpayment for 2020.

This can be discharged as follows;

(1) Individual A can make payment of the €1,000 via My Account

or

(2) Revenue will reduce the individuals’ tax credits by €250 for the years 2022 to 2025 thereby recouping the underpayment via the PAYE system

2021 PUP payments:

In 2021 PUP payments will be taxes on a real time basis as follows;

The Department of Employment Affairs and Social Protection will notify Revenue on a weekly basis of the amount of PUP paid to each recipient.

Revenue will then collect any tax due by reducing the person’s tax credits and rate band.  To do this Revenue will “annualise” the weekly amount of PUP.

The adjusted tax credits and rate band are then applied on a Week 1 basis and the revisions will be reflected in the Revenue Payroll Notifications issued by Revenue to the person’s employer.

This process in 2021 should ensure there are no underpayments at the end of the year arising from PUP payments.

For more information on Pandemic Unemployment Payment visit revenue.ie

Or contact us

Pandemic Unemployment Payment

Covid Restrictions Support Scheme (CRSS)

Payments received by employers :

Payments received under the Covid Restrictions Support Scheme (CRSS) are revenue in nature and will be treated as a reduction of otherwise tax-deductible trading expenses for tax purposes.

Similar to the accounting and tax treatment where the restart grant was used to defray revenue related expenditure, where the CRSS receipts are used to defray expenditure which is revenue in nature like utility bills or insurance costs then it will be taken into account when calculating the amounts chargeable to income tax or corporation tax.

In essence, the payments are taxable income and for accounting purposes, the CRSS receipts will be credited against the expenses incurred thereby leaving the net expense reflected in the accounts which are then allowable as a deduction for income tax or corporation tax purposes.

Therefore the payments received are effectively taxable payments subject to income tax or corporation tax depending on the structure of the entity receiving the payments.

Entities should keep a log of the expenditure which they have discharged from the CRSS receipts which can then be used by the agents to make the appropriate credit entries against the expenditure to arrive at the tax-deductible net figures.

Please do not hesitate to contact us if you have any questions.

Revenue's Tax Bill

Revenue’s Tax Bill

Since the beginning of the Covid-19 emergency, we have spoken many times about the various supports made available to both employers and employees to help weather the storm. Two of the main supports that was put in place by the government are the ongoing Temporary Wage Subsidy Scheme (TWSS) and Pandemic Unemployment Payment (PUP). The scheme has seen a number of changes since its inception last year, but this month saw many recipients left confused and concerned.

Over 630,000 taxpayers who were in receipt of either scheme will have received their preliminary end of year statements and found themselves facing a tax bill from Revenue. Any individual who was in receipt of either scheme must pay particular attention to their end of year statement as it is likely that there may be an underpayment of tax listed. While Revenue have long stated that this will be the case, this has still come as a shock for many recipients.

These bills have arrived because neither the TWSS nor the PUP schemes were taxed at the source through the PAYE system from March to August 2020. As a result, the employee is seen to have underpaid income tax and USC for 2020. Although tax was not paid during this period, recipients will still be deemed to have made their PRSI contributions, so neither scheme should affect social welfare entitlements.

The scheme which replaced the TWSS in September 2020, the Employment Wage Subsidy Scheme (EWSS), is now taxed through the PAYE system, so no further hefty tax bills should be seen as a result of this scheme.

The brighter news for those who find themselves with a somewhat unexpected tax bill following these schemes is that the bill is not required to be immediately paid, nor required to be paid in a lump sum at all if this is not something the employee can manage. Revenue have said that they will collect the full, or remaining bill interest-free by reducing tax credits over the course of a four-year period, beginning in January 2022, so there will be no need for immediate action.

It is recommended that you complete your online tax return via MyAccount to ensure that all information is correct and that your outstanding bill is also correct, this also allows employees to claim any tax credits or reliefs they may be due in order to reduce the overall bill (for example, the remote working credit is one which is often overlooked).

We hope that this information has been useful for you and as always, please don’t hesitate to contact us here at EcovisDCA where we remain open and ready to help. Please do not hesitate to contact us.

For more information visit revenue.ie

Euro Currency

Employee Wage Subsidy Scheme (EWSS) Update

The first week’s of 2021 may not have held all the solutions or change from 2020 that many had hoped, with many businesses once again closing after a brief opening for the Christmas period, so we wanted to take the time to remind you that we are here and happy to help with any business questions or queries you have. We will also continue to bring you the information to help your business and financial lives, across, what will be hopefully, a brighter 2021.

As we work our way through another lockdown, we find ourselves once again focusing in on the supports available to keep businesses alive during Level 5 restrictions, with the Employee Wage Subsidy Scheme (EWSS) finding itself swooping in to save the day once more.

However, it is vital to highlight the changes to the EWSS since its inception and it’s important to keep yourself informed of the requirements and guidelines for eligibility, even if you are currently in receipt of the scheme. So it is important that you stay aware of what is required:

The Company must:

  • Have a Tax Clearance Cert for the duration of the scheme.
  • Have turnover projections and demonstrate that the business is expected to experience a 30% reduction in turnover between January 1st and June 30th 2021.
  • Show that this reduction in turnover is directly caused by Covid-19.
  • Show that this reduction is relative to the same period in 2019 if the company was in existence prior to this date.

Revenue’s in-depth guidelines can be viewed by CLICKING HERE

When calculating your projections for 2021, we strongly advise you to keep copies of both the projections and the actual turnover figures as they come in, in case Revenue requires them in the future. As always, it is better to be over than underprepared.

Should you have any concerns or queries about these or any other business and financial issues, please don’t hesitate to contact us here at EcovisDCA where we remain open and ready to help. Please do not hesitate to contact us.

The SME Credit Guarantee Scheme

The SME Credit Guarantee Scheme

We have discussed Covid-19 business supports at length since the onset of this global emergency, while also discussing the vital nature of the SME area in Ireland. SMEs make up a huge portion of Irish businesses, and whilst last years looming Brexit panic may have seemed like an enormous threat to their business activities, this year has proven the ultimate challenge. With this in mind today we will be discussing another area of assistance for these types of businesses both in the wake of Covid and in the realm of what the new normal will look like.

The SME Credit Guarantee Scheme is intended to encourage additional lending to SMEs, something we can all agree is absolutely essential. This scheme offers a partial Government guarantee of 80% to banks against losses, essentially placing the Government as a guarantor against the SME’s loan. The scheme is aimed at SMEs facing difficulty in accessing traditional lending and is operated on behalf of the Strategic Banking Corporation of Ireland (SCBI) and is accessible from lenders such as AIB, Bank of Ireland and Ulster Bank. These loans are available to fund working capital, refinancing current Covid19 funding and also in order to invest in your business so it can adapt to the current emergency.

Loans range from €10,000 to €1million and can have a term of up to 7 years. A guaranteed premium will apply to be paid directly to the Government. The scheme is available until December 2020. We recommend checking in with your local banking branch for further information and eligibility requirements.

As always, we here at Ecovis DCA are available should you have any concerns or queries on any business or financial matters.

For more information visit Enterprise.gov.ie

The Help to Buy Incentive

The Help to Buy (HTB) Incentive

The Help to Buy (HTB) incentive is a scheme introduced in 2014 aimed at assisting first time buyers in getting a foothold on the property ladder and helping them to navigate the newer and stricter mortgage rules for prospective homeowners. The scheme is intended to help first time buyers with the deposit needed to build or purchase a new home. The scheme will give you a refund of the Income Tax and DIRT paid over the previous four years which is then used as the partial or full deposit.

 

The scheme has undoubtedly already helped many first-time buyers purchase their homes, but it has also come under fire in recent months as it has been suggested that the scheme has driven up house prices, thereby excluding more prospective buyers from the market. It has also been suggested that the scheme has aided many who were not in fact relying on it, and who already have the means to purchase their home.

 

This scheme was not only extended to the end of 2021 but enhanced in the July Stimulus plan and now allows for first time buyers to claim back the lower of either 10% of a property’s value or €30,000. For homes purchased after January 1st, 2017, the refund will be paid directly to the contractor.

 

Applications for the scheme must be made online via the myAccount or Revenue Online services.

 

We advise checking the Revenue website for information on contractors and developers taking part in the scheme as a first port of call. Should you have any queries please don’t hesitate to contact us.

5 Tips for leading your company out of a crisis

Getting out of a crisis is difficult and requires extraordinary measures and great efforts from a company and its people. Since we’re here to help, we’ve listed 5 tips for leading your company out of a crisis or turnaround situation. Read on and make smart use of these tips.

1. Identify (and solve) the problem

The first step to overcoming a crisis is to identify the main problem that caused it. You can’t deal with a crisis until you determine its core issues. It can be caused by internal factors such as poor financial assistance by management accountants or external factors such as natural disasters like the COVID-19 pandemic. To solve the causes of underlying problems, you should analyze the common signs of distress listed below.

Distress signals

  • Declining or negative cash flow;
  • Declining stock price;
  • Regulatory inquiries;
  • Large or unplanned workforce reductions;
  • Increase in outstanding accounts payable;
  • Resignations of key finance staff;
  • Management turnover;
  • Shrinking EBITDA (Earnings before interest, taxes, depreciation and amortization) margin.

2. Find (and retain) talented people

One of the few good sides of a crisis is that the opportunity arises to find the next level of talent in an organization. As a turnaround manager, you should look beyond the leadership team for people with institutional knowledge. They know all the ins and outs of the company and are essential to realizing the impact of potential changes on the business. Be aware though, in many cases, they are the dissatisfied ones, unhappy with the company’s performance. But because of this, they are willing to point out the painful truths – and that’s just what needs to be done on the road to leading a company out of a crisis.

You should also keep an eye out for people that want to add value and impact. In most cases, you won’t find these people sitting around the table at the beginning, but two or three levels down – waiting for an opportunity to be part of something greater than themselves. Retaining these people isn’t always about money and bonuses: it’s about figuring out their individual needs and get them involved.

3. Approaching financial experts

A crisis is usually not the result of a single decision but an accumulation of multiple unsound decisions. Trying to deal with it by yourself and not asking for help can be an unsound decision. Financial advisors are adept at solving cash flow issues that are stifling the growth of an organization. Their strategies can be useful in a crisis scenario that requires you to make hard choices as well. Getting help from experts such as chartered accountants and business support advisors can lead your company out of a crisis.

4. Concentrate on cash

In general, the board and management of most companies focus on complex, long-term metrics like EBIT and turnover. There’s nothing wrong with that, but unpleasant surprises are waiting when no one is concentrating on cash, especially during a crisis. So, the opposite needs to be done to keep a company financially healthy. The best way of doing this is by finding out which investments are making or burning cash, and by subsequently bringing your business back to its fundamental element of success.

Monitoring your cash flow will help you understand your company’s income and expenses. Every asset the company owns, from investments, physical assets to services rendered should be numbered and assessed for monetary value. When going through a crisis, it is critical to make sure employee salaries, credit payments and invoice payments can be met. You should also consider loans to ease through the current deficit. But make sure to not burden yourself further since banks and other financial institutions charge high interest on loans.

5. Dare to criticise your own business plan

The best thing you can do to avoid distress is to periodically review your business plans and see how the company scores on operational and market performance. Find out where you stand as a company using essential financial and cash flow milestones, and do the same concerning your business and competitors. If that shows that you’re not moving with – or outpacing – the rest of the industry, then your business plan may be out-of-date.

Conclusion

According to recent reports, the corporate crisis has increased in Ireland due to the recent COVID-19 pandemic. Getting out of a crisis may take some time and effort since it can’t be controlled instantly. At last, don’t forget to analyze your past mistakes, get help from experts like business advisors and accountants, make an effective strategic plan and manage your company’s finances. By following the steps mentioned above, you will be able to recover and overcome the ongoing crisis.

A Guide to Working At Home…

As of this week, we have seen a massive spike in those working remotely due to the Taoiseach’s announcement of the closure of all physical workplaces which are non-essential in the battle against this virus. We know that your inboxes are being constantly bombarded with information about this virus and its effects and we cannot turn on the television or radio without hearing further information. With this in mind, we thought we would offer some tips today on adjusting to this new and challenging working atmosphere at home.

Working from home can often make an employee more productive as it eliminates the double commute which can often add at least an hour either side of your working day. This allows for greater productivity in the working day whilst also reducing the stressor of a commute. Being in your own space causes you to re-evaluate your working habits and work schedule, while also allowing for greater ease of maximising your work to life balance, but it is not without its challenges especially when sharing that space with children, friends or family members. There are a number of steps you can take to maximise the productivity and enjoyment of your work from home day however.

Schedule:
This is the most important tip we can offer for working from home. When working in your own space it can be tempting to adjust your hours, particularly with children in the home. This can be damaging to your productivity and also encroach on your time with family outside of working hours, so it is vital to maintain your regular working hours where possible. Set an alarm for the morning, take your normal tea and lunch breaks and keep that schedule going. Sticking to your routine may be helpful to your mental health during this challenging time.

Social:
This tip is likely very specific to our current situation of social distancing where there is no time in the office or time with loved ones outside of your immediate home. A good tip for maintaining productivity and working relationships during this time is to arrange a regular catch up group video chat with your co-workers to check in in the same way you would in the office.

Set Ground Rules:
Setting ground rules for those in your home will be vital during this time as we do not yet know how long this scenario may last and with everyone in the same boat cabin fever begins to creep in. Ensure those in your home are aware of your working hours and boundaries ahead of time to avoid repeats of that infamous BBC News interview.

Step Away:
When working from home, the time spent away from your desk can often be as vital as the time spent at the desk. Particularly during our current “lockdown” situation, where daily exercise is vital. Stepping away from your desk and taking your full break will help clear your mind and set you up for productivity in the day ahead.

Space:
Setting a designated office space will help continue to separate your business and home life and make it easier to step away from your working persona at the end of the working day. Similarly, having a separate work phone available when possible will be helpful in this endeavour.

Show Up Dress Up:
Video conferencing has become the main method of meetings being held since the Taoiseach’s announcement in early March, and it is important to show up to these meetings and make your voice heard. Getting dressed into working clothes for the day may also assist in separating work and home life, as tempting as the loungewear naturally is.

School is in Session:
Online training may be a method of staying busy if you are finding your working day slow from home, and will add a new arrow to your quiver when working life returns to normal.

Slow Down and Breath:
It is important to ensure that you are working in a well ventilated room, just opening the window and taking a moment to breathe can be a vital part of refreshing your mind for the rest of the working day in the middle of so much chaos.

Social Media:
Social media is a constant for us in this day and age, and particularly during such a bizarre scenario as our current emergency is, it is often infecting every moment of our lives. When working from home it may be tempting to get sucked into the world of social media. Whilst taking breaks for brain space is advised, social media may be a rabbit hole we do not want to fall into.

We hope that this information will be of benefit to you during these difficult times. Whilst the landscape of our working lives may have changed for the time being, we here at Ecovis DCA are a constant and always available for you.A Guide to Working At Home…

Euro Currency

Alternative Lending

Flender

Flender Ireland  is a Peer to Peer Lender for small and medium sized business. It is authorised by the UK Financial Conduct Authority. Flender offer the  following products:

 

Term Loans

Flender offers businesses access to fast funding up to €300,000. Get a credit decision within 6 hours and receive funds within 24 hours. Terms range from 6 to 36 months, with rates starting as low as 6.45%.

In order to apply for a term loan companies / sole traders need:

  • Completed Application form
  • Last 2 years Filed Accounts – Unabridged version with P & L and Balance Sheet
  • Last 2 years Revenue Filed Form 11s (if sole trader)
  • Up to date Management accounts if available
  • Last 6 months bank statements
  • Up to date tax cert – (Tax Ref Number & Access Number ID)

Applications are made on line at : https://www.flender.ie/users/registration/borrower

 

Merchant Cash Advance

Online merchants and other businesses that conduct a majority of their sales online are prime candidates for our MCA product. Since businesses of this nature receive payment primarily via credit card purchases, the monthly payment amount is less when a business is making less revenue and increases when the business makes more revenue. If you earn revenue via check or cash, an MCA probably isn’t right for you.

 

  • Works with natural trade cycles – ideal for retail, hospitality and service businesses
  • Repayments made daily as a small percentage of card terminal revenues
  • Lump sum funding from €10,000 to €250,000
  • Terms from 3 to 12 months
  • Repayments made directly through merchant card processors

 

For further information please contact:

Ecovis DCA

Stephen Connolly – Stephen.connolly@ecovis.ie

Dennis Duffy  – dennis.duffy@ecovis.ie

 

Flender

Colin Canny  – colin.canny@flender.ie

 

Linked Finance

Covid 19 Emergency Loan Product

Linked Finance has launched a Deferred Start Loan for businesses affected by the Covid-19 pandemic. It means businesses can get access to working capital now, with the reassurance of no repayments for the first 3 months.

After the first 3 months payment-free, the loan is then repaid over a 12 month period.

Loans are available up to €100,000 to businesses that are trading for at least 2 years and have a (pre-crisis) annual turnover in excess of €100,000. As with their standard loans, the application process is very simple, just three standard documents, no projections and a credit decision will be given in 24 hours

Any established and creditworthy business, whether it is a limited company, sole trader or business partnership, can apply for a loan on Linked Finance.

In order to apply for this facility companies / sole traders will need:

  • Last 6 full calendar months bank statements i.e. Sept 1st to Feb 29th.
  • Proof of overdraft (IF ANY) Even online screen-print is fine
  • Latest full set of accounts to include Admin Expenses breakdown

Some conditions apply. These include:

  • If you are a sole trader, you must be a permanent resident of Ireland.
  • If your business is a partnership, it must have a permanent place of business in Ireland and at least half of its partners must be permanent residents of Ireland.
  • If your business is a limited company, it must be registered with the Companies Registration Office (CRO).
  • It must have filed accounts with the CRO (if required to do so) at least once and at least half of its directors must be Irish residents.
  • Your business must have been actively trading for at least the past two years.
  • Your business must meet our minimum credit risk and fraud criteria.
  • Your business must not have any outstanding judgements for more than €250.
  • In special circumstances, we can support younger companies who have demonstrated strong growth potential over a shorter trading history but this is at Linked Finance’s sole discretion.

For further information please contact

Ecovis DCA

Stephen Connolly – Stephen.connolly@ecovis.ie

Dennis Duffy  – dennis.duffy@ecovis.ie

Linked Finance

Mark Lindsey – mark@linkedfinance.com