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Revenue's Debt Warehousing Scheme

Revenue’s Debt Warehousing Scheme

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Revenue recently reminded businesses that were to resume trading, once lockdown ended, that their Debt Warehousing Scheme was still in operation. The process of debt warehousing essentially allows businesses to “park” their debts for a period of time in order to support cash flow when the company resumes trading. This will have been an invaluable asset to many companies, who may otherwise have struggled to reopen their doors following the Covid-19 lockdowns, however, this has naturally not come without drawbacks.

One issue for businesses to be aware of this scheme is if the company were availing of Debt Warehousing for PAYE employer liabilities, any directors or employees with a material interest in the company cannot claim for taxes deducted if these have been warehoused and not paid over to Revenue. This may mean that individuals could find themselves personally liable for PAYE deducted but not paid. While this is unlikely to become a major stumbling block, this is one issue that has not been widely spoken about but you very much need to be aware of it.

The system was put in place to ensure that cash flow would remain available to businesses at a time of need, with some 86,000 businesses availing of the scheme. The scheme has provided approximately €2.3 billion of cash flow to businesses and is now being extended to the end of 2021, with no interest during 2022 and a rate of 3% applying thereafter.

Revenue has assured businesses that payment terms will be flexible at the end of the term. This will also be determined by the company’s capacity to pay these arrears at the same time as paying their current liabilities. Collector General Joe Howley has stated that:

“This initiative gives viable businesses the opportunity to survive the economic shock of the pandemic and to hopefully thrive as the economy recovers. We will be in contact with each business that is availing with the Debt Warehousing Scheme to explain how the arrangements will operate for their business. The flexibility around debt that is warehoused will allow businesses additional time to get back on their feet after re-opening”.

It is important to remember that even businesses availing of this scheme must file all tax returns as soon as they are due.

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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.

Pandemic Unemployment Payment

Pandemic Unemployment Payment (PUP) 

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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

Revenue Irish Tax Firm

Temporary Wage Subsidy Scheme (TWSS) 

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Subsidies received by employers:

The TWSS subsidies received by employers from Revenue are revenue receipts by their nature and accordingly will be treated as a reduction in the wages / salaries related expenditure line item for the accounting period concerned.  The subsidies received reduced the expenditure incurred by employers and therefore these subsidies will reduce the amount of wages and salaries allowable as an expense for tax deduction purposes.

Clawback of PAYE from employees :

The Temporary Wage Subsidy Scheme (TWSS) payments by Revenue to employers are treated as part of the employee’s emoluments – ie salary and wages for tax purposes.

The subsidies were not taxed in real-time via the PAYE system however and the amounts received in 2020 by the employees are chargeable to income tax and USC.

The amount of income tax and USC will be reflected on each employee’s preliminary end of year statement for 2020 which is accessible via the PAYE My Account facility for each employee since 15th January 2021.

The employee’s must then complete an income tax return to receive their final statement of liability which will provide the final over or underpayment for the year.

Employees have the option to pay any underpayment in full via My Account or they have the default option of discharging any underpayment arising due to the TWSS subsidies over a four year period commencing in 2022 via a reduction in the annual tax credit entitlement.

As an example – Employee A has a €2,500 income tax underpayment for 2020 This can be discharged as follows;

(1) Employee can make payment of the €2,500 via My Account

or

(2) Revenue will reduce the employees’ tax credits by €625 for the years 2022 to 2025 thereby recouping the underpayment via the PAYE system

Revenue has confirmed that employers may discharge the income tax liabilities of employees without a benefit in kind charge being levied by Revenue. Employers can pay the employee’s liability in one of two ways;

(a) Payment direct to the employee who then must pay the liability

(b) Amend the final payroll submission for 2020 to include additional income tax paid and USC paid that equals the liability shown on the employee’s end of year statement.

The employer will then need to pay the additional amounts that are notified by Revenue in a revised monthly PAYE statement.

For more information visit Revenue.ie or feel free to contact us

Revenue's Tax Bill

Revenue’s Tax Bill

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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

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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 Help to Buy Incentive

The Help to Buy (HTB) Incentive

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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.

The Phased Payment Plan

The Phased Payment Plan – (PPA)

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We have dedicated ourselves over the past couple of months to sharing important information with our clients and friends, information which could assist in keeping businesses alive and kicking during such a difficult time, as our country begins to play hopscotch between the levels within the Living with Covid Plan.

As we discussed in recent weeks, a number of extensions have been granted which may assist businesses in filing on time, despite the ongoing challenges posed by the Coronavirus Emergency. It was announced recently that companies would be given more time to pay any outstanding tax bills to Revenue using a payment plan at a discounted rate of interest and would have until the end of September to agree.

Previously the July stimulus package allowed the warehousing of Covid tax debts until a period of reopening, as well as offering a level of amnesty on non-Covid tax debts. This saw a phased payment plan (PPA) enacted by Revenue wherein companies could repay their outstanding dates at a 3% interest rate over a phased plan. The deadline for putting this arrangement in place has now been extended to the end of October, which may allow for many other companies to avail of this plan.

Revenue themselves issued a statement stating that the extension was due to the challenges faced by taxpayers and tax agents during this time, while Collector General Joe Howley state that:

“The 3% interest rate available to taxpayers under this measure is a significant reduction from standard interest rates of 8% to 10% per annum that normally apply to late payments of tax. I strongly encourage the uptake of this opportunity and of the extended deadline that now applies”.

Another bonus to partaking in this PPA is that your company may qualify for tax clearance as a result of utilising this plan of debt payment.

Visit the Revenue site for more information on this and other matters, including a comprehensive booklet here Revenue information booklet .

We hope that this information is of use to you, and as always, we are fully available should you have any queries or concerns on any business and financial matters.

Euro Currency

Alternative Lending

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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

Banking supports

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Micro Finance Ireland

If your business is impacted or may be impacted by COVID-19 resulting in a reduction of 15% or more in actual or projected turnover or profit, AND you are having difficulty in accessing  finance from commercial lending providers, the MFI COVID-19 Business Loan may be able to help your business.

In addition, Local Enterprise Offices in every county provide a range of business supports for micro- enterprises including business continuity and preparedness advisory supports connected to the  COVID-19 outbreak. Contact your Local Enterprise Office for more information.

Eligibility

  • Any business (Sole Trader, Partnership or Limited Company) with less than 10 employees and annual turnover of up to €2m
  • Not in a position to avail of finance from Banks and other commercial lending providers
  • 15% of actual or projected turnover or profit is negatively impacted by COVID-19

Product Features

  • Loans from €5,000 – €50,000
  • Supports businesses who have been impacted negatively by coronavirus in Ireland
  • Loan terms typically up to 3 years
  • Up to 6 months Interest only payments
  • No fees/no hidden costs/charges
  • Fixed repayments/no penalty for early repayment

Application process

Application documentation can be found at this web address – https://microfinanceireland.ie/loan-packages/covid19/

  • Complete application form
  • Prepare monthly cash flow forecast for 12 months
  • Complete Micro Finance Ireland Business Plan
  • Submit six months bank statements and in the case of a Limited company six months bank statements for Directors and Shareholders holding 25% or more of the issued share capital of the company.
  • For Limited company applicants only – A central Credit Register report for each Director and for any Shareholders holding 25% or more of the issued share capital of the company.

Strategic Banking Corporation of Ireland

The Department of Business, Enterprise and Innovation announced a number of supports for businesses facing challenges being presented by the current Covid-19 situation. The Credit Guarantee Scheme is in place and available now to SMEs subject to the relevant terms and conditions. Separately the SBCI is currently working to finalise the terms and conditions of the SBCI COVID19 Working Capital Scheme and the eligibility application process for this. The SBCI website will be updated as soon as these are finalised. In the interim if you wish to be kept informed on developments please email the SBCI at info@sbci.gov.ie

SME Credit Guarantee Scheme (CGS) 

The Scheme aims to assist viable SMEs, which under normal lending criteria are unable to borrow from their bank, in accessing credit. The scheme operates by providing an 80% guarantee to participating finance providers (currently AIB, Bank of Ireland and Ulster Bank) on qualifying loans to SMEs.

The Scheme is operated on behalf of the Department of Business, Enterprise and Innovation (D/BEI) by the Strategic Banking Corporation of Ireland (SBCI) and is available from the participating banks (AIB, Bank of Ireland and Ulster Bank). If you are an SME,  you can approach any one of the participating banks and apply for a loan facility under CGS.

Key Features of the Scheme:

  • Facilities of €10,000 up to €1m
  • Terms of up to 7 years
  • Term Loans, Demand Loans and Performance Bonds

 

Who is eligible for the Scheme? 

SMEs may be eligible if they:

  • Are involved in a commercial activity
  • Are a sole trader, partnership, franchise, co-operative or limited company
  • In the lender’s opinion have a viable business proposal
  • Are able to repay the facility

 

How to apply do for the scheme

The scheme is available through participating lenders AIB, Bank of Ireland and Ulster Bank at the web addresses below:

AIB : https://business.aib.ie/products/finance-and-loans/credit-guarantee-scheme

BOI : https://businessbanking.bankofireland.com/credit/credit-guarantee-scheme/

Ulster Bank : https://digital.ulsterbank.ie/business/loans-and-finance/alternative-financing.html

 

Allied Irish Bank (AIB)

AIB’s Covid 19 supports are available at this web address – https://aib.ie/covid19

The financial supports include the following

Cashflow products available to customers and web address for applications

Business Credit Line – https://business.aib.ie/products/finance-and-loans/business-credit-line?_ga=2.155766331.160936585.1584353997-1581556376.1584353997

Farmer Credit Line – https://business.aib.ie/products/finance-and-loans/business-credit-line?_ga=2.155766331.160936585.1584353997-1581556376.1584353997

Promptpay – https://business.aib.ie/products/finance-and-loans/promptpay-and-insurance-premium-finance?_ga=2.146517556.160936585.1584353997-1581556376.1584353997

Business loans of between €2,000 and €60,000 can be applied for on line at this web address : https://business.aib.ie/products/finance-and-loans/business-loans?_ga=2.185208617.160936585.1584353997-1581556376.1584353997

Customer in Difficulty (Forbearance Requests)

AIB have a number of possible solutions available depending on your circumstances

  • Capital Moratorium
  • Capital and Interest Moratorium
  • Covenant Waivers

AIB Advisors are available in branch or on the phone 1890 478 833

 

Bank of Ireland

The supports offered by Bank of Ireland are as follows:

  • Emergency working capital, prioritising loan decisions for impacted customers, payment flexibility on loan facilities, and the provision of trade finance and foreign currency products to support sourcing products from new suppliers internationally.
  • Customers who are concerned about the impact of COVID-19 on their business are encouraged to make contact with their Business Relationship Manager or ring 0818 200 348.
  • Bank of Ireland sectoral experts – in agriculture, manufacturing, hospitality, health, food and beverage, and retail convenience – are also available to support customers.

A full listing of supports from BOI are at this web address: https://businessbanking.bankofireland.com/covid-19/supports-for-businesses/

 

Ulster Bank

Ulster Bank have introduced a financial assessment that is designed to evaluate your financial situation and to offer support where you need it most.

Specially trained staff will carry out a financial review. They will review your current financial situation and take you through the repayment options available. These options include:

  • Extending loan terms
  • Temporarily moving to interest only payments
  • Reduced payments on a temporary basis
  • Postponement of monthly repayments for a defined period of time

A full listing of supports from Ulster Bank are at this web address: https://digital.ulsterbank.ie/personal/help-and-support/struggling-financially.html

 

Revenue Irish Tax Firm

Revenue Announce Measures during Covid 19 Outbreak

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In recent days, the news around the spread of Covid-19 has become inescapable and naturally worrying for individuals, families and business owners. Here at EcovisDCA we have and will always be committed to providing SME and larger business owners with practical and useful advice to help their businesses survive and thrive, and we intend to continue that trend during this period of adversity and whatever aftermath lies ahead.

In the brief few minutes of the recent announcement by Taoiseach Leo Varadkar regarding the Covid 19 pandemic, it seems that Irish life and business life would be instantly changed. As all schools, childcare facilities and tourism sites would be closed for a period of at least 2 weeks, workers worried about their capacity to continue working. Following on from that, new social distancing recommendations suggesting that workers should work from home where possible and limit direct social contact in the form of group lunches and face-to-face meetings instantly changed how businesses would function in Ireland. Obviously, this is uncharted territory and something that wasn’t planned for in anyone’s business plan for 2020 so it is natural that the business landscape and our economy will suffer to some extent as a result. We here at EcovisDCA will be updating on any and all information pertaining to business life and any news that may light up the uncertain darkness we find ourselves in.

  • Due to the new recommendations and the concerns that workers had for their working capacity going forward, the Government and Revenue have announced updated advice to support workers and SMEs who may experience cashflow issues.
  • All debt enforcement activity is suspending until further notice.
  • The Relevant Contract Tax review due to take place this month is suspended until further notice.
  • A customs ‘green routing’ status will be given to critical pharmaceutical products and medicines.
  • Tax returns should continue to be sent on time.
  • Extended availability of Government subsidised or Government guaranteed loan finance will be offered to businesses affected by Covid 19.
  • Extended grant availability through Enterprise Ireland, Udaras na Gaeltachta and local Enterprise Offices specifically allocated for businesses affected by Covid 19.

Meanwhile, Bank of Ireland and Ulster Bank have also become the first banks to assure their customers that practices like deferrals will be put in place for mortgage holders who may find themselves unable to keep on top of their payments during this time.

For social welfare support for self-employed please click on the links to get the latest information from Revenue:

https://www.revenue.ie/en/corporate/press-office/press-releases/2020/pr-130320-revenue-announce-measures-to-assist-smes-experiencing-cashflow-difficulties-arising-from-covid-19.aspx

https://www.revenue.ie/en/corporate/press-office/press-releases/2020/pr-100320-engage-early-with-revenue-key-advice-to-businesses-experiencing-tax-payment-problems.aspx

Should you find that your business is beginning to struggle during this time, it is advisable that you contact Revenue directly to discuss your own specific case.