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 whatever 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 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 guarantee 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 EcovisDCA are available should you have any concerns or queries on any business or financial matters.

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.

Wage Subsidy Scheme Extension

The Wage Subsidy Scheme has been vital for the continued survival of many Irish businesses amidst this current crisis, allowing them to keep staff on payroll during a time that otherwise may have necessitated mass layoffs. The scheme was changed to the Employment Wage Subsidy Scheme (EWSS) on September 1st and has now been extended until 31st March 2021, it is not yet known if the scheme will continue past this date.

With the current Level 5 restrictions, the Government announced that the rates for the scheme will be revised to better support businesses, with these new rates becoming effective as of October 19th. In terms of qualifying criteria, the turnover criteria for application is now 25% of the turnover for the same period in 2019.

Finance Minister Paschal Donohoe has said of these changes:

“Consistent with the revised health restrictions that have been announced by Government, a decision has been made to revise the pandemic supports that have been key to sustaining businesses and helping people to manage financially in the midst of this very challenging time. […] The Employment Wage Subsidy Scheme is being enhanced, with a maximum rate now payable at €350, bringing it in line with revisions that are being made to the Pandemic Unemployment Payment”.

Both the extension of and the newly enhanced nature of the scheme are intended to ensure that companies can keep their employees employed where possible and avoid layoffs and employees needing to revert to the Pandemic Unemployment Payment (PUP). It is hoped that these changes will help companies easier transition back to normal business activities when it is safe to do so.

Further information on all Covid-19 pandemic supports can be found on the Revenue website. As always, we here at Ecovis DCA are available should you have any concerns or queries.

The Phased Payment Plan – (PPA)

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.

Budget 2021 – The €17.75 BN Package To Support Business, Homebuyers & Hospitality Sector.

As with any Budget Day announcements, the devil is in the detail and obviously this year the details will be even more essential and will be looked into more critically than ever, as the initial announcements are crossed referenced, checked, discussed and debated.

Here we outline the main & most relevant changes that you should be aware of for your business. We do however anticipate there will further clarifications, alterations and adjustments to be made as announcements receive clarification. We will endeavour to ensure that we provide understanding on how each change directly impacts you and your business.

Naturally, we will keep you up to date with any important changes but as ever please Contact Us directly to discuss your specific queries regarding how these changes are likely to impact you directly and how best to achieve the ideal outcome for you and your business.

It is important to note that Minister Donohoe says that this year’s budget has been drawn up based on the assumption of “the continued presence of the virus in our country next year, and the absence of a broadly available vaccine, alongside the threat of a no-deal Brexit”

Budget 2021 The Main Points:

Economy

  • Between €4bn and €5bn for a ‘super fund’ to deal with the twin-threat posed by Covid-19 and Brexit is being discussed.
  • At least €1bn in extra funding for Capital Expenditure in 2021 over and above what was budgeted for in 2020. Much of it will be spent on transport, such as roads projects, public transport and active travel including walking and cycling. It will also be spent on social housing and school building projects.

Business

  • Businesses forced to close due to Covid-19 restrictions will be able to claim up to €5,000 week from Revenue. The Covid-19 Restrictions Support Scheme (CRSS) will provide businesses with immediate funding if they are forced to close due to level three or higher restrictions. It will be focused on the tourism, hospitality and arts sector for now but maybe expanded further if higher restrictions are announced.
  • Existing grants for the live entertainment sector will be topped up with extra funding and new schemes are to be rolled out to protect jobs in the industry. One scheme will provide a minimum of €10,000 to live venues where concerts or plays have been forced to cancel due to the Covid-19 pandemic.
  • A reduced VAT rate for the hospitality sector from 13.5 per cent to 9 per cent will be introduced with effect from November 1st until December 2021.
  • To support small and medium-sized businesses, debt warehousing provisions will be extended for a period of a year with no interest.
  • A new variant of the Employment Wage Subsidy Scheme will kick in after the current scheme ends next spring.
  • An additional €55 million for a “tourism business support scheme and €5 million for tourism product development.” will be made available.

Tax

  • The 12.5 per cent rate remains in place.
  • Work will commence on the development of a tax credit scheme for the digital gaming sector.
  • There will be no broad changes to income tax credits or band
  • In order to ensure the salary of a full-time worker on the minimum wage will remain outside the top rate of USC, the ceiling of the second USC rate band will be increased to €20,484 to €20,687.
  • The weekly threshold for the higher rate of employers PRSI will go from €394 to €398 to ensure there is no incentive to reduce working hours for a full-time minimum wage worker.
  • For the self-employed, a commitment to equalising the earned income credit with the PAYE credit by raising it by €150 to €1,650.
  • There will be an increase in the dependent relative tax credit from €70 to €245.
  • On climate change, carbon tax will be increased by €7.50 from €26 to €33.50 per tonne of CO2. Legislation will be provided to increase the tax each year by €7.50 up to 2029 and by €6.50 in 2030 to achieve €100 per tonne.
  • In terms of changes to taxing and cars, a modified new structure of rates and bands will be put in place with lower VRT rates for cars with lower emissions. The nitrogen oxide surcharge bands will also be changed so that higher emitting vehicles pay more.
  • The flat-rate addition for farmers (which compensates non-VAT registered farmers for irrecoverable VAT on their input costs) to increase from 5.4% to 5.6% from 1 January 2021

Capital Gains Tax

  • Entrepreneur’s relief to be available on disposals of shares by persons who have held the shares for a continuous period of three years at any time prior to the disposal (rather than a continuous period of three years in the five years prior to disposal as is the requirement currently).

Property

  • The enhanced Help to Buy scheme which was introduced as part of the Government stimulus package on 23 July 2020 to be extended to 31 December 2021.
  • Residential development stamp duty refund scheme to be extended by one year to construction operations commenced by 31 December 2022, with the time allowed between commencement and completion of a qualifying project in order to be eligible for the refund also to be extended from 24 months to 30 months.
  • Stamp duty consanguinity relief applicable to transfers of agricultural property between certain family members to be extended for a further three years to 31 December 2023.
  • The reduced 1% rate of stamp duty applicable to qualifying farm consolidation transactions to be extended to December 2022.

Brexit

  • There is €340m set aside to be spent on Brexit supports in 2021.
  • This includes an additional allocation for compliance expenditure in 2021. This will apply for work at ports and airports and provides for an additional 500 staff bringing the total provision for approximately 1,500 for operationalising checks ahead of January 1st.
  • A further €600 million will be allocated to the capital budget in addition to a planned increase of €1 billion for 2021 under the National Development Plan.

We hope that this information will be of use to you and that if these extensions are the wiggle room your company needs. As always, we here at EcovisDCA are here for you. Should you require any assistance or guidance on any business or financial matters, Please do not hesitate to contact us.

Important Tax Deadlines 2020

We are living and working through some challenging times at present with a need to adjust to a ‘new normal’ which can be as difficult in the business world as it is in our home lives. As always, we here at Ecovis DCA want to help our clients and friends stay up to date, and have compiled the current tax return deadline changes we believe you may need to be aware of.

In light of the current public health situation, any shift in deadlines may make all the difference to your company. In addition to the below, it is worth noting that the HMRC are currently readying for Brexit, if your company has dealings with the United Kingdom, it would be wise to stay up to date on any changes here. In these volatile times, any shift in deadlines can be a massive boost to companies.

Income Tax:

The Government have recently stated that income tax will remain unchanged in the coming Budget. The deadline for self-assessed customers filing online will be extended from November 12th to December 10th.*

Corporation Tax:

Revenue recently announced a 4-week extension of the online filing system for Pay and File customers. The new date for customers submitting their 2019 self-assessment online will be Thursday, December 10th. Those not paying online must still file by October 31st. In addition to this change, Revenue has confirmed that the deadline for Corporate Tax return surcharge suspension will remain September 23rd.

Gift Tax:

Revenue has also announced that they will be extending the filing deadline for beneficiaries of gifts or inheritance for the year ending August 31st, 2020. This deadline has been shifted to December 10th for customers to make their CGT return, and as always this must be done via the Revenue Online System (ROS).

Local Property Tax:

For the third time, the reevaluation date for Local Property Tax has been deferred. The new date has been set as November 1st, 2021. This deferral is intended to bring forward legislation on the basis of fairness, bring new homes previously exempt into the system and to ensure that all monies collected in a given county will stay within that county.

Carbon Tax:

Minister for Finance, Paschal Donohoe has stated that he intends to repeat last year’s change to carbon tax and reinvest funds into areas which will assist with climate change.

*Please remember that these deadline extensions apply only to those filing online via ROS. If you are not filing online, your deadlines of October 31st will remain unchanged and failure to file on time may result in disciplinary action.

We hope that this information will be of use to you and that if these extensions are the wiggle room your company needs. As always, we here at EcovisDCA are here for you. Should you require any assistance or guidance on any business or financial matters, Please do not hesitate to contact us.

All the Best Things in Small Packages

As we mentioned when we discussed the Government’s announcement of the July Stimulus plan there would be some options available to the owner of small and medium enterprises (SMEs), to protect their businesses during and following on from the Covid-19 emergency. As previously discussed the Temporary Wage Subsidy Scheme has come to an end being replaced with the Employment Wage Subsidy Scheme (EWSS), which has changes that may come as quite a blow to some SMEs as it may see them no longer capable of keeping their full complement of staff, or of topping up wages to the full amount. This has been a cause for concern for many small Irish businesses who wish to keep their business afloat during these times. With this in mind, we have decided to focus on one of most recently available funding options for some of our most vulnerable businesses, micro businesses which could be of great assistance to them during this period.

Microfinance Ireland are now open for loan applications of up to €25,000 for small companies of 10 employees or less. The loan term will be 3 years and follows on from an earlier loan scheme we discussed earlier in the year, which saw loans approved for 687 companies. CEO of Microfinance Ireland, Garrett Stokes has said of the current loan landscape;

“We can see where the demand is coming from most and out Covid-19 loan scheme has been tailored to meet the ongoing needs of those micro-businesses as they navigate their way through the current challenges and beyond.”

The key point to note in this loan which may be of interest to small struggling companies is the fact that these loans will have no repayments and zero interest for the first six months. In addition to this, interest paid in months 6 to 12 will be refunded by the Government in month 13 of the loan, providing that all repayments are up to date. Following on from this period, interest will apply at a rate of 4.5% on applications made through Local Enterprise Offices or at a rate of 5.5% for applications made via Microfinance Ireland themselves.

There is to be a state backed Credit Guarantee Scheme available to larger SMEs once they can prove that they have been negatively impacted by the Covid-19 pandemic.

Applications can be made through Local Enterprise Offices or through MFI directly.

We hope that this information is of benefit to you and your business. Should you have any queries or concerns, please do not hesitate to contact us here at EcovisDCA where we are always happy to help.

EWSS Employment Wage Subsidy Scheme

In the recent July Stimulus package the Government introduced the Employment Wage Subsidy Scheme (EWSS). This will replace the TWSS scheme which will cease on 31st August 2020.
Employers may not operate both schemes simultaneously for the same employee. Employers who are currently using the TWSS scheme must continue to do so until the end of August, at which point they can participate in the EWSS provided they meet the eligibility requirements.
However, Employers currently using TWSS may claim the EWSS for new hires from 1st July 2020. Employers who have not registered for TWSS, may use the EWSS from the 1st July 2020.
Employer Eligibility
Employers must prove their eligibility to Revenue by demonstrating:
  • That their business has suffered major disruption as a result of COVID-19. The business has suffered at least a 30% drop in either turnover or orders for the period 1st July 2020 to the 31st December 2020, when compared to the reference period of 1st July 2019 to 31st December 2019
  • The Employer must have an up to date Tax Clearance Certificate
  • The Employer must register for the EWSS. This facility is now available on ROS.
  • The Employer must review their eligibility at the end of each month and if employers no longer qualify, they must deregister for EWSS through ROS with effect from the following day (that being the 1st of the month) and cease claiming the subsidy.
  • If an employer becomes aware prior to the end of the month that they will no longer meet the eligibility criteria (e.g. unexpected donation or grant received at the start of a month), they should deregister immediately and cease to claim subsidies.
  • If circumstances change the following month and the employer is again eligible, they can reregister and claim from the date of reregistration. It is not possible to backdate the claim to include the period of deregistration as that correctly reflected the employer’s expectation at that time.
Employee Eligibility
Under EWSS eligible employees include individuals who are employed at any time by the business during the qualifying period of 1st July 2020 to 31st March 2021 and in receipt of gross wages between €151.50 and €1,462 per week. Originally, proprietary directors were excluded from the scheme, but the Government removed this restriction on the 31st of July last. Proprietary directors who keep ‘ordinary’ employees on the payroll will be eligible to the EWSS from the 1st September. Revenue will provide more guidance on this shortly. However, certain connected persons, as defined by Revenue, are ineligible unless they were on the payroll and got paid between 1st July 2019 and 30th June 2020.
Under EWSS, registered eligible Employers will receive a subsidy per eligible Employee, based on the amount of Gross Pay (as defined by Revenue under PAYE Modernisation) paid to an Employee and reported to Revenue on the Payroll Submission Request per pay period submitted to ROS. The amount of subsidy payable for a weekly payroll are as follows (monthly equivalent figures have yet to be confirmed) –
Gross Pay Subsidy
  • Less than €151.50:  €0.00 per week
  • €151.50 to €202.99:  €151.50 per week
  • €203.00 to €1,462.00:  €203.00 per week
  • More than €1,462.00:  €0.00 per week
The subsidies will be paid to the Employer once a month in arrears, after the return due date (14th of the following month).Under EWSS, payrolls return to normal pre-COVID calculations. All gross payments made to Employees are subject to Tax, USC, EE PRSI and ER PRSI in the normal way.

Employers currently using TWSS, must ensure that for all pay dates on or after the 1st September that the Employee’s primary PRSI class is set to the class applicable prior to COVID. No net addition Wage Subsidy amount should be made. Normal pay rules apply. For any Payroll Submission Request submitted to Revenue with a payment date on or after 1st September 2020 will be rejected by ROS, if J9 is reported as an Employee’s PRSI class and or a COVID Payment amount on the submission.
One point to bear in mind is that under EWSS, the Employer Rate of PRSI for eligible Employees is 0.05%. Revenue have yet to confirm how this will be implemented, but it is likely that the Employer will calculate Employer PRSI at the normal rate and Revenue will refund the difference between what was calculated at the normal rate by the Employer and the 0.05% that applies under EWSS. This may be refunded directly or the Employer monthly liability on their Statement of Account will be reduced by the value of the over calculated Employer PRSI.
To minimise abuse, safeguards will be included specifically to ensure employers are not laying off one employee to replace them with more than one employee earning a lower wage, thereby maximising subsidy entitlement, and manipulation of payroll including deferring, suspending, accruing, increasing or decreasing gross wage that would normally be payable.
To discuss how the full measures can benefit your business directly please contact us.

The Restart Grant Plus Scheme

Here at EcovisDCA, we are as always aiming to help Irish SMEs flourish. The current emergency has been a troubling time for all business owners, with SMEs being some of the most vulnerable by nature. We are committed to providing you with all the information available which could assist your business in flourishing in the face of this new adversity.

The Restart Grant Plus scheme offers a grant to businesses in order to help them to reopen their premises and return to work following the Covid-19 crisis. The grants available range is from €4,000 to a maximum of €25,000. The scheme has been increased from a previous minimum of €2,000 and a maximum of €10,000.

The Restart Grant scheme will be based on the rates assessment for the business for the 2019 year and is primarily available to small and medium enterprises (SMEs) as well as independent hotels. The scheme is now also available to sectors such as sports businesses, charity shops, restaurants, pubs, activity centres, and tourist attractions.

If your company has utilised this scheme previously, you may still be eligible to apply for a second payment, this second payment will only reach a total combined value of the new maximum value. In the event that your company was unable to access funding from the scheme but now qualifies, you will be entitled to make a new application.

The requirements for accessing this grant are that the company must have:

  • Between 0 – 250 employees.
  • Eligible firms now include medium-sized firms and independent hotels with up to 250 employees, as well as small firms (increased from 50 employees).
  • A turnover of less than €100,000 per employee up to a maximum of €25million.
  • Operating from a premises that is commercially rateable by a local authority.
  • A reduced level of turnover of 25% as a result of the Covid-19.
  • Committed to a reopening plan and remain committed to sustaining employment levels.
  • Intention to retain employees that are on the temporary wage subsidy scheme.
  • B&Bs in non-rated premises will be eligible to apply for the minimum €4,000 grant from Fáilte Ireland.
  • A franchisee which is a financially independent company and is completely separate to the franchisor is eligible to apply.
  • Multinationals are not eligible. Small Irish based subsidiaries with overseas parent companies are not eligible.

The aim is that applications will be processed, and an answer received within two weeks of application. Applications can be made through your local authority website.

As always, we here at EcovisDCA are here for you. Should you require any assistance or guidance on any business or financial matters, please do not hesitate to contact us.

Research and Development (R&D) Credit: Appointment of expert to assist in audits

Revenue have recently released a manual setting out the Revenue procedure for appointing and briefing an independent expert to assist in evaluating the science test in R&D tax credit audits.

By way of background, each year, Revenue’s Incentives unit places an advertisement on the public procurement website, www.etenders.gov.ie1 , inviting applications for placement on a panel of experts to advise in relation to claims for tax credits in respect of incremental expenditure incurred wholly and exclusively on R&D.

Applications for membership of the panel will be accepted at any time during the year. In order, to be eligible to apply for a place on the panel, individuals must hold a relevant PhD or experiential equivalent. Where an independent expert is required in a field that is not represented on the panel formed from the above process, the Incentives unit will identify suitable experts and approach them with a view to their joining the panel.

The appropriate timing for appointing an independent expert will vary from case to case. In some cases, it will be necessary to appoint an independent expert at the outset of a review while in others one may only be required where Revenue and the company reach an impasse in relation to an aspect of the science test.

Independent experts should not be engaged to explain the science: they should only be engaged where there is a doubt that the science test has been met.

Full details of the manual and procedure can be found here