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Energy Supports for Business in 2023

As part of Budget 2023, new supports have been made available by The Department of Enterprise, Trade and Employment. The supports are designed to help businesses of all sizes with their rising energy costs and to make them more sustainable through longer and medium-term investments.

This support is being delivered through five new targeted energy supports schemes: three direct supports to business and two government-backed loans.

It is important to note that Businesses may be eligible for more than one scheme. These schemes are currently in development. Information regarding applications, eligibility criteria and administration will be made available in the coming months.

Direct Supports

 

1) €1.25 billion Temporary Business Energy Support Scheme (TBESS)
Small and medium businesses are the backbone of our domestic economy and they support thousands of jobs. This particular scheme will provide qualifying businesses with up to 40% of the increase in electricity or gas bills up to €10,000 per month and will be administered by the Revenue Commissioners. The details outlined to date are as follows;
  • Subject to State Aid approval, once legislated for, it is expected that the scheme will be backdated to September 2022 and will run until February of next year.
  • The scheme will be open to businesses that carry on a Case 1 trade, are tax compliant and have experienced a significant increase (more than 50 per cent) in their natural gas and electricity costs.
  • It will be administered by the Revenue Commissioners and will operate on a self-assessment basis.
  • The scheme will operate by comparing the average unit price for the relevant bill period in 2022 with the average unit price in the corresponding reference period in 2021.
  • In order to be eligible for the scheme, the average unit price must have increased by more than 50 per cent.
  • Claims will be able to be made by businesses for up to 40 per cent of the amount of the increase in the bill, capped at €10,000 per month per trade.
  • An overall cap will apply on the total amount which a business can claim.
  • The scheme is being designed to be compliant with the EU State Aid Temporary Crisis Framework and will require approval by the EU Commission in the advance of making payments.
2) €200 million Ukraine Enterprise Crisis Scheme

The €200 million Ukraine Enterprise Crisis Scheme will have two measures and will assist viable but vulnerable firms in manufacturing and internationally traded services.Measure 1 will provide aid in the form of direct grants, repayable advances, equity and/or loan notes aid to ensure liquidity and access to finance for enterprises that face economic challenges as a result of increased input costs and supply chain difficulties, and which have suffered a 15% decrease in operating surplus in 2022 compared to 2021.

Measure 2 will provide aid for additional costs due to exceptionally severe increases in natural gas and electricity prices experienced by energy-intensive businesses (with spend greater than 3% of turnover on energy) which have suffered a 15% decrease in operating surplus in 2022 compared to 2021, and doubled per unit cost of gas/electricity.

3) Small Firms Investment in Energy Efficiency Scheme
The Small Firms Investment in Energy Efficiency Scheme will provide a grant through the Local Enterprise Office (LEO) network to companies to encourage investment in energy efficiency technologies or processes that reduce carbon emissions and overall energy costs. The scheme will follow on from the LEO Green for Micro Scheme which currently provides advice and technical support to firms on energy efficiency and reducing their carbon footprint.

The new scheme will open in 2023 and will be administered by the Local Enterprise Offices.

 

Loans

4) €1.2 billion Ukraine Credit Guarantee Scheme
The State-backed Ukraine Credit Guarantee Scheme will provide low-cost working capital or medium-term investment, especially in energy-saving measures to SMEs, primary producers and small mid-caps (businesses with fewer than 500 employees). Loans of up to 6 years will be available, from €10,000 to €1 million, with no collateral required for loans up to €250,000.
5) €500 million Growth and Sustainability Loan Scheme

The Growth and Sustainability Loan Scheme (GSLS) will make up to €500 million in low-cost investment loans of up to 10 years available to SMEs, including farmers and fishers and small mid-caps, with no collateral required for loans up to €500,000. A minimum of 30% of the lending volume will be targeted towards environmental sustainability. 70% of lending will be for strategic investments with a view to increasing productivity and competitiveness and thus underpinning future business sustainability and growth.More detail on the above and existing schemes is available by CLICKING HERE

We provide best-in-class accounting, bookkeeping and taxation services in Dublin 2. We are a firm of highly qualified chartered accountants, business advisors and tax consultants with over 20 years of experience.

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Budget 2023 Breakdown

That special time of year is upon us once again – Budget time. Budget 2023 was just announced, and it was certainly one for the books, coming at a time of continued uncertainty and concern over the exponential increases in the cost of living. With everything from fuel and energy to food and lifestyle items becoming increasingly expensive both employees and business owners have begun to feel significant financial strain in recent months. With this in mind, Minister for Finance, Paschal Donohoe was quick to explain that this Budget would be, by necessity a “Cost of Living Budget” aimed at safeguarding the public during this difficult period.

As always, we have compiled some of the main changes included in this Budget that may affect you and your business.

New SME Scheme:

  • As we have discussed many times in the past, SMEs form the backbone of the Irish Business Landscape, whilst also being among the most vulnerable sectors in need of supports. As part of Budget 2023, it was announced that there will be a new scheme aimed at supporting SMEs during this time.
  • The new Temporary Business Energy Support Scheme (TBESS) will aim to assist businesses struggling with the increase in energy costs this Winter. The scheme will operate on a self-assessment basis and will be open to all businesses who experience increases of at least 50% in energy costs compared to 2021 by having The State pay up to 40% of the costs, capped at €10,000 monthly.
  • It is important to note that the scheme requires approval from the European Commission under state aid rules, but it is expected that the scheme will be approved without issue.
Tax Rate for SMEs:
  • The 12.5% Corporation Tax rate for SMEs is to remain unchanged with the Minister also reaffirming Ireland’s commitment to the OECD international tax agreement in ensuring the minimum effective rate of tax for companies with revenues of more than €750m is set at 15%.
Non-Cash Benefits for Employees:
  • The tax-free limit for non-cash benefits to employees will increase from €500 to €1,000 for this tax year. Employers will be entitled to gift two vouchers or gifts to employees during each tax year.
Sustainability:
  • The push towards sustainability featured in the Budget announcement with a new long-term loan (The Growth and Sustainability Loan Scheme) of up to €500,000 being made available to SMEs to allow them to expand their sustainability and energy efficiency levels or to begin that journey.
  • There will also be a new grant available through Local Enterprise Offices (LEOs) to assist smaller companies in reducing their carbon footprint and increasing the energy efficiency of their businesses. This grant will be named the Small Firms Investment in Energy Efficiency Scheme.
Hospitality:
  • One of the hardest hit sectors during the Covid-19 emergency would be the Hospitality Sector, which remains in need of support. It was announced during Budget 2023 that the 9% VAT rate for this sector will remain in place until the end of Feb 2023.
Taxation:
    • It was announced that there is to be a third taxation rate of income tax, but there is no further information on this at present.
    • The Knowledge Development Box for qualifying companies will be extended to 2027.
    • The Research and Development (R&D) Tax Credit will now have a fixed 3-year payment system, and the current caps in place for the payable element will be removed.
    • The Standard Rate Tax Band will be increased to €40,000 for a single person.
    • Personal, employee and income tax credits will be increased to €1,775.
    • The 2% USC Rate Band will be increased to €22,920.
    • A new tax credit specifically for Renters of €500 per year will be available for the 2022 tax year. This will only be available to renters who are not currently in receipt of any other housing benefits.

We provide best-in-class accounting, bookkeeping and taxation services in Dublin 2. We are a firm of highly qualified chartered accountants, business advisors and tax consultants with over 20 years of experience.

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Help, We Need Somebody – SME Supports

We have spoken multiple times recently about the supports available to Irish SMEs in order to help them to weather the current storms facing Irish businesses, but it is an unfortunate fact that not all SMEs will find themselves capable of survival during these times despite their best efforts.

It emerged this week that the last three months has seen up to a 60% increase in the liquidation of SMEs. From Covid recovery to the ever-increasing cost of living, the failure rates of smaller Irish businesses has begun to increase exponentially. PwC have stated in their most recent survey that company failures have increased 14% quarter-on-quarter this year.

This may be result of many of the Covid-specific supports offered to companies being slowly pared back as the country began to reopen after the height of the Covid-19 pandemic. Until early this year, many supports including the EWSS (Employee Wage Subsidy Scheme) were still in place with many companies still availing of the service to support their business. As a result, the combination of less supports and the increase in costs such as fuel and property etc, has seen far more businesses fail, than we saw in the previous year when Covid-related supports were still available. The highest failure rates have been in the health and energy sectors this year so far.

Interestingly, it was also reported that business failures are at a much higher rate in the UK, where Covid-specific supports were removed much sooner than here in Ireland, showing that across the board, there has been a lack of knowledge about just how damaging the pandemic has been to the business world, as well as just how many companies found themselves wholly reliant on these supports.

These failure rates are not yet at their highest, and larger companies currently seem to be weathering the storm better, with the hospitality industry staying strong at present, but insolvency numbers are steadily climbing and cause for concern now that it is realised that there was such reliance on Covid supports to combat financial pressures.

It is not all doom and gloom however as the Government have recently announced an initiative to combat this downturn, and support Irish SMEs. The Government have now launched a new low-cost loan scheme aimed specifically at SMEs to replace the Covid-19 credit guarantee scheme which recently ended. The scheme will allow companies to access one-to-six-year loans ranging from €25,000 and €1.5million.

Tánaiste Leo Varadkar has said of the scheme:

“This successor scheme will give SMEs, including farmers, fishers and food businesses, the option to access really competitively priced loans, should they need to avail of that option, in addition to the other help that is available.”

We provide best-in-class accounting, bookkeeping and taxation services in Dublin 2. We are a firm of highly qualified chartered accountants, business advisors and tax consultants with over 20 years of experience.

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Cashflow Woes

Tax season is naturally always a stressful one for all business owners, even more so during these times where the cost of living has become untenable. For many business owners, tax season can often mean paying out a large sum in one fell swoop which can often feel like a burden. Luckily, there are ways to spread this cost over a period of time to make this payment less of a shock to the system. Some finance companies allow you to spread the cost of tax and insurance bills over the 12-month period.

The requirement to pay large bills in one lump sum can cause an incredible strain on your business finances. This is particularly true of SMEs (Small and Medium Enterprises) who may not have these larger sums available as disposable cashflow. This can be where Peer-to-Peer financing can come in.

As we have discussed in recent months, certain peer-to-peer financing companies offer SMEs an alternative and faster way to access finance in order to assist them in maintaining a healthy cashflow in the face of rising costs. These Peer-to-Peer finance providers often provide loans from as low as €5,000 to as high as €500,000 with less paperwork than the traditional lending avenues and offer a faster result time with a flexible repayment plan.

One of the main benefits of Peer-to-Peer lending is that there is no penalty for early or lump-sum repayment. P2P lenders often also offer immediate drawdown upon acceptance.

There are many of these lenders currently available to assist you and your business during these trying times.

We provide best-in-class accounting, bookkeeping and taxation services in Dublin 2. We are a firm of highly qualified chartered accountants, business advisors and tax consultants with over 20 years of experience.

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Oh, What A Relief

Here at Ecovis DCA, we spend a great deal of time discussing issues that specifically pertain to Irish Small and Medium Enterprises (SMEs) due to their importance to the Irish economy and our clients. There is another vital area of the Irish economy that we sometime overlook, and it is one that the Irish economy overall was built upon, farming.

There are a great many intricacies to the farming career that many are not aware of. From taxation to the day-to-day general finance issues associated with running a farm there are many steps that are overlooked. Today we would like to focus on the issue of Capital Gains Tax (CGT) in relation to farming, as there are ways for CGT liability to be avoided by utilising Retirement Relief.

It is not massively well known that there are certain scenarios in which CGT may be charged on the transfer of ownership of a farm. These include:

  • Scenarios where the farmer is over 66 years of age.
  • Scenarios wherein the farm has not been owned for minimum 10 years.
  • Scenarios where the farm has been leased either fully or partially for a minimum of 25 years.
  • Scenarios where the farmer themselves were not working on the farm for a minimum of 10 consecutive years prior to the transfer.
  • Scenarios where the farm is under joint names with an individual who does not have any involvement with the farm.

These scenarios may possibly be circumvented by use of Retirement Relief. It is important to note that although the relief is called “Retirement Relief,” one does not have to actively retire from the farm to avail of this, but it is a useful tool for situations where you need to transfer ownership of the farm, without finding yourself liable for CGT.

There are some conditions to the use of Retirement Relief as one might expect.

  • If claiming Retirement Relief on medical grounds, medical evidence must be provided.
  • If claiming Retirement Relief on age grounds, the individual must reach age 55 within 12 months of transfer.

The Relief can be broken into two types depending on who the farm is being transferred to:

1) Transfer to your child.

Full relief can be claimed if the farmer is between 55 and 65 years of age at the time of transfer, after 66 years of age, the relief amount is capped at €3m.

The child receiving the farm must hold the farm for a minimum of 6 years, or CGT will be charged, and the relief will be forfeit.

2) Transfer to someone outside of the family.

Full relief can be claimed if the market value of the farm does not exceed €750,000 for individuals under 66 years of age, and €500,000 for individuals over 66 years of age.

It is vital to remember that these are lifetime limits, and the farm may not exceed these limits or the risk of being charged CGT remains.

 

We hope that this information has been of interest to you, and should you like us to cover more farm-related topics please do let us know as we would be happy to oblige.

The Ol’ Switch n Save

Given the changes we’ve seen to our economic landscape in recent years and the inevitability that these changes are having on our ever-lightening wallets, we are going to take a look at some potential cost-saving measures you might like to consider. Prices have recently been rising at the fastest pace we have seen in decades with inflation hitting the highest level it has been in over 20 years in March. This price inflation is expected to peak in the summer at an ultimate high of 8%.

“Inflationary increases” is something that may be a new experience for many, particularly after years of moderate price increases, however now the words “cost of living” are very much part of the general conversation. While at times the consistent increase in the general cost of living can seem insurmountable there are ways that individuals can offset these cost increases.

Energy:

One of the most dramatically escalating costs in recent months is the cost of energy. One of the simplest and least invasive ways of saving money on energy costs is to shop around and switch providers, who regularly offer cheaper deals to new customers signing up with them. bonkers.ie is a terrific way to compare price plans for all energy suppliers. And this notion of not staying with the same provider and shopping around for the best deal can also apply across the board for services such as car insurance, phone & broadband plans etc. so it is certainly worth the few moments of “hassle”.

With many providers offering special deals or discount rates for new customers, it is more than worth your while to shop around rather than stay with one provider because providers rarely have such incentives for loyalty!… And just to note, in order to shop around for your best energy deal, be sure to have your MPRN to hand.

Renewable Energy:

As technology continues to advance, so too do our energy-saving options. There are now ways to increase the self-sustainability of your home, while also having a positive impact on the environment.

One example is SEAI’s Communities Energy Grant (CEG) which supports energy efficiency community projects through capital funding and partnerships. There are twenty-seven companies across the country that can function as project managers for this grant to ensure that your property can reach its fullest energy-saving potential whether it is a domestic or commercial property.

Other ways of cutting costs while benefitting the environment include switching to an Electric Car. The price of petrol and diesel has noticeably increased exponentially in recent years and with more and more countries making the journey towards Net Zero, there are sure to be more taxes applied to fossil fuels as the years go on. Whilst the ESB has recently increased the cost of public charging, there are grants available for the installation of home chargers and for those with company cars, there are certain Benefit In Kind exemptions and discounts for converting to an electric car.

Mortgages:

Mortgages as a general term may not be synonymous with money-saving, but similarly to your utility bills, it is advisable to shop around and consider changing your provider as there is potential for significant savings. While the notion of swapping mortgage providers may be nerve-wracking the mortgage rate you are on can make a big difference to your monthly repayments so it is worth reviewing rates being offered by various lenders.

These are just a couple of small ways that savings can be found during these expensive times and we will come back to this topic to offer further ways to offset increasing prices.

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.

New Code of Practice for Revenue Compliance

On 1 May 2022, Revenue’s new compliance intervention framework will come into effect. The recently announced framework was developed by Revenue in an attempt to further curtail non-compliance under all tax heads.

The aim of the new framework is to encourage taxpayers to review their tax affairs and to address any issues on non-compliance prior to receiving contact from Revenue. The structure of the framework is comprised of three levels: Level 1 considers actions of self-correction and voluntary disclosures, meanwhile Levels 2 and 3 deal with the confrontation of non-compliance based on circumstances and behaviour of the taxpayer.

Level 1
The objective of Level 1 is to facilitate efficient self-correction and self-reviews of tax affairs, allowing for taxpayers to submit unprompted qualifying disclosures to Revenue without the need for any in-depth intervention on the part of Revenue.

Examples of the extent of intervention under Level 1 include:

  • Reminders of outstanding tax returns
  • Requests to conduct a self-review
  • Profile interviews
  • Engagement with businesses under the Cooperative Compliance Framework (CCF)

Level 2
The scope of Level 2 interventions can range from the examination of one single issue to a full Revenue audit. In their new framework, Revenue outline the two types of intervention that might arise under Level 2:

  • Risk Review
  • Audit

Risk Reviews are a new concept that focus on a risk or small number of risks on a tax return. This is a desk-based intervention and is essentially replacing the Revenue Aspect Query which is being retired with the introduction of the new framework. However, unlike Aspect Queries, there will be no option to submit an unprompted qualifying disclosure once notice of intervention has been issued.

The practices and procedures of an audit intervention will largely remain the same under the framework.

Level 3
Level 3 interventions will tackle high-risk cases suspected of fraud and tax evasion. Interventions take the form of a Revenue Investigation. Once a notice of investigation is received, the taxpayer may make a disclosure to Revenue but they will no longer have the benefit of submitting a qualifying disclosure

Code of Practice Update
The Code of Practice for Revenue Compliance Interventions contains a number of other miscellaneous changes which also come into effect alongside the new framework on 1 May 2022. The key changes include:

  • It is now required that Revenue are notified in writing of a taxpayer’s self-correction without penalty.
  • It is no longer satisfactory for a return to be amended on ROS without written notice.
    The time frame for submitting a notice of intention to prepare a prompted disclosure has been increased from 14 days to 21 days.
  • Where there is a tax underpayment or overclaim of refund that is less than €50,000, details of the taxpayer will not be published on the tax defaulters list. This is an increase from the previous €35,000 threshold
  • Taxpayers will now have 28 days to prepare for an audit, an increase from the previous 21 day time frame
  • Qualifying disclosures in respect of tax underpayments relating to offshore matters can now be submitted

Click Here to read Revenue’s Full Code of Practice

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.

Who’s in the house? Debt’s in the (ware) house!

Following on from the multiple economic changes that have come about following the Covid-19 pandemic we have spoken multiple times about the concept of “Debt Warehousing” and the availability of same for Irish businesses hit by the emergency. With restrictions recently fully lifted, the past number of weeks has been a busy one for many Irish businesses. We are now beginning to see signs of a strong recovery, allowing many businesses to begin once again hitting the ground running after a stressful period.

A great many companies have been in some way “saved” by Government assistance during the Covid-19 period that may otherwise have had to close their doors. One of the most popular options, next to the EWSS was the concept of debt warehousing. It was recently confirmed that up to €3.2billion in tax debt is currently being warehoused by Revenue for businesses financially affected by Covid restrictions, primarily large and medium-sized businesses.

These debts are currently warehoused under the understanding that they will remain parked interest-free with no requirement to begin payback until at least January 2023, with a spokesperson for Revenue recently confirming:

“There is no requirement to pay for most businesses until at least January 2023. At the end of the period, a tailored plan will be agreed with the businesses appropriate to their economic circumstances at that time.”

Some companies have already begun to pay off their warehoused tax debt due to the financial improvements gained from coming out of the lockdown periods. For companies that haven’t yet begun to pay, it is important to note that an interest rate of 3% per year will begin to apply from 2023. This remains a discount from the usual 8% interest rates that would apply to late tax payments. It is also important to stress that Revenue wants a business with tax debt to have engaged and proposed a repayment plan by the end of 2022.

While there remains some controversy with the scheme, with some thinking that more allowances should be made for struggling companies in terms of a tax write off or similar as the payback time looms closer, and others believing that the scheme is already too lenient and creates a level of unfairness in the market, there is no denying that the scheme has provided a massive level of assistance where needed.

At this moment of time, Revenue have confirmed that they have no plans to entirely write off these debts.

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.

Happy Christmas from Ecovis DCA

Here at ECOVIS DCA we would like to wish all our clients a very Happy Christmas, and wish you and your business a prosperous 2022!

We will be closing for business on Thursday the 23rd of December and reopening on Tuesday the 4th of January 2022.

Revenue update on changes to EWSS subsidy rates

On December 9th 2021 the Minister for Finance, Paschal Donohoe, announced that the enhanced rates of subsidy provided for under the Employment Wage Subsidy Scheme (EWSS) will be reinstated for December 2021 and January 2022.

The revised rates are as follows:

 Weekly Pay 1st Dec – 31st Jan
(Enhanced rates)
1st Feb – 28th Feb
(Reduced Rates)
1st Mar – 30th April
(Flat Rate)
 Less than €151.50 €0 €0 €0
 €151.50 – €202.99 €203 €151.50 €100
 €203 – €299.99 €250 €203 €100
 €300 – €399.99 €300 €203 €100
 €400 – €1,462 €350 €203 €100
 Over €1,462 €0 €0 €0
 Employer’s PRSI 0.5% 0.5% TBC

Employers who have already submitted eligible EWSS payroll submissions in respect of December 2021, some of whom may have already received a subsidy payment calculated at a lower subsidy rate, do not need to take any action or make any amendments.

Revenue confirmed that, during the course of next week, it will identify the relevant payroll submissions, revise the calculation of subsidy due having regard to the enhanced rates outlined above, and process additional subsidy payments to the relevant employers shortly thereafter.

However, Revenue reminded employers that there is still a requirement to submit a timely monthly EWSS Eligibility Review Form (ERF) to ensure continued access to support under the scheme.

November’s EWSS ERF is due by 15 December 2021 and December’s EWSS ERF is due by 15 January 2022.

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.