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Revenue Irish Tax Firm

Temporary Wage Subsidy Scheme (TWSS) 

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

Pandemic Unemployment Payment

Restart Grant / Restart Grant Plus

Payments received by entities:

The Minister for Finance confirmed that Revenue will treat the taxation of these grants differently depending on the purposes for which the grant was used.

Where the grant is 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 such grants are taxable income and for accounting purposes the grant receipts will be credited against the expenses incurred thereby leaving the net expense reflected in the accounts which is then allowable as a deduction for income tax or corporation tax purposes.

For example – Insurance premium annual cost paid by company A in the sum of €5,000. Company A uses the proceeds of the grant of €2,500 to part finance the premium payment. A net cost of €2,500 will be reflected in the accounts and allowable as a deduction against profits for tax purposes which reflects the economic reality that the company had a net cash outflow in relation to the premium of €2,500.

Entities should keep a log of the expenditure which they have discharged from the grant 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.

Where the grant is used to defray capital expenditure like acquiring plant and machinery for use in the business, then the entity will be entitled to claim capital allowances on the expenditure incurred net of the grant received.

For example – Machine A acquired for €5,000 and proceeds of the grant of €2,500 were used to part finance same.

Capital allowances can be claimed on the net cost of €2,500 at 12.5% per annum.

Revenue have confirmed the above treatment will apply for both the restart grant and restart grant plus

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.

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.

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

How do you know that your company is in trouble? Well, depending on the situation, there can be many signs of potential distress – see some listed below. Most of the time, troubled companies are dealing with multiple signs or problems at the same time, caused by internal and external factors (i.e. the current COVID-19 crisis) interacting together. Identifying these signs and solving the underlying problems is one of the things you should do first when you strive to lead a company out of a crisis.

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.

 

  1. 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 organisation. 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 realising 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.

 

  1. 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. This makes it easier to see the actions needed to get back on track in terms of cash flow and steer out of the crisis you’re in.

As a company, you need forecasts with a mid- to longterm view to be able to focus on cash and avoid cash flow-related surprises. Focussing on an investment with a five-year return while money goes out the door, isn’t the right way either, so concentrating on cash flow is vital.

 

  1. Treat every turnaround like a crisis

Most companies without a crisis mindset, react the same to change: they focus on avoiding risks, and therefore they take small steps instead of leaps to get something done. There’s nothing wrong with this approach in a normal situation, but when in a real crisis, significant action is needed. Companies that treat every turnaround like a crisis and thus have that crisis mindset are willing to try the bold things that could change the trajectory of a company.

  

  1. 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.

Last but not least: don’t forget to look back at your business performance over the past to identify any trends. If you keep missing targets, ask why and most of all: be critical.

Covid-19

It is currently impossible to avoid the news of the Covid-19 epidemic at the moment as the situation unfolds rapidly and becomes an increased risk of becoming a global pandemic. A pandemic is an issue that we in this country would be unlikely to have prepared for in a business sense and as a result we may see this virus affect our business landscapes in ways we may not have expected. As cases begin to grow in number and community transmission begins to become more apparent, it is important for businesses to have a plan in place for keeping their employees safe.

The Government have recently published an income support and economic stimulus package which outlines the following main points for companies who may find themselves on lock down or needing to self-isolate their staff or work from home or to reduce economic impact:

  • The 6 waiting days for sick pay with a medical cert will be waived.
  • The means test requirement for Supplementary Welfare Allowance for medically certified self-isolation will be removed.
  • Self-employed individuals will now be entitled to receive either illness benefit, or non-means tested supplementary welfare allowance.
  • A €200million liquidity support fund will be available for impacted firms.
  • The existing systematic short time working scheme is available for employees who may be placed on reduced working arrangements.

On a more global scale, it has been reported that businesses worldwide are changing and adapting practises to better cope with Covid-19. Many companies in Ireland, the United Kingdom and the United States have immediately implemented travel restrictions or a work from home policy for the foreseeable future in order to avoid community transmission within the office space. Unfortunately, these issues will naturally cause service issues for some.

From looking at the China model which involves the businesses who were first hit and continue to deal with the fallout of the virus, a few key pointers for other businesses worldwide have been outlined:

  • Plan ahead but be prepared for the need to be adaptable as the situation develops.
  • Keep employees informed consistently so that they feel safe and protected.
  • Relocate labour where possible. In situations where employees can work from home to prevent community transmission this can be effective as well as social distancing practises in roles that can not be completed at home.
  • Utilise social media and shift some operations to an online system where possible.
  • Prepare for recovery be it fast or slow moving.
  • Look for the positive points and identify where your business can improve in the face of adversity.
  • Use the situation to become more innovative and embrace innovation within your business and your employees. Thinking on your feet is essential in such a fast moving constantly unfolding landscape of change.

This will undoubtedly be a period of unease and difficulty for many on both a business and personal level, but through following the appropriate guidelines we can endeavour to keep all feeling safe.

 

The Rescue & Restructuring Scheme

Financial Aid To Restructure & Survive

As you are all aware, we here at EcovisDCA are massive supporters of Irish SMEs (Small and Medium Enterprises). We understand the importance of these types of companies, underpinning and creating a foundation for all Irish business. In general, we like to keep our clients and friends up to date on any issues that may negatively or positively affect these vital businesses. You may or may not have heard of the Rescue and Restructuring Scheme in Ireland. The scheme provides financial aid and State support to companies experiencing acute liquidity. The intention was that the scheme would offer assistance to those struggling companies who have the possibility of restructuring and continued survival in the business world.

The scheme was first introduced in November 2017, offering a fund of €10million to struggling Irish SMEs. In 2018, an extension to the scheme was approved and announced, with an additional €10million being made available to these businesses. The scheme was scheduled to run until 2020 and would offer support in form of loans repayable over a period of 18 months. The only exemptions to the scheme were those companies in the financial, coal and steel sectors.

The introduction of this scheme in 2017 and 2018’s subsequent extension and funds increase was already a massive boon to the Irish SME sector, offering some form of safety net in times of trouble. As we are all aware, financially speaking anything can happen in the economy and smaller businesses are usually the first to feel the negative effects, so this offer of €20million to survive Brexit woes for struggling SMEs was welcome news.

Further good news arrived on the horizon this month, with the announcement that the scheme would once again be extended with further funds being made available. Perhaps the whispers of terms like “hard Brexit” and “borders” may have had something to do with it, but on this occasion we see a massive increase as it was recently announced that The European Commission has agreed to increase the budget of the scheme by a whopping €180million to €200million.

We are delighted that the Government are taking the appropriate steps to assist in the safeguarding of these vital companies and their future in the eye of the Brexit hurricane, as it has long been known that Irish SMEs could be the most vulnerable in the event of Brexit causing trade and financial issues in Ireland. These additional funds show a willingness to create and support vulnerable businesses and create an ongoing contingency plan for these uncertain weeks and months ahead.

Should you have any queries on any business or financial matters, please don’t hesitate to contact us here at EcovisDCA where we are always happy to help.

The Climate Action Fund – A New Grant Available

Save the Planet – It’s the only one with Chocolate

Whilst Irish business can often be a stressful place to be in the current environment, there has been a lot of movement in the right direction during Ireland’s economic recovery and we have spoken in the past about new layers of support being put in place for SMEs (Small and Medium Enterprises) which remain the backbone of Irish business. From new funding opportunities to new investment opportunities Ireland is fast becoming the ideal place to do business, with some suggesting that Brexit may in fact be beneficial to Ireland’s business standings worldwide. We have spoken in the past about a number of available grants and today we will discuss one which we feel may be of particular benefit to our clients.

In our modern age it has become increasingly apparent that each individual must make strides to make our planet a more sustainable place to live. Often there is very little incentive to engage in such a costly process with the return of investment being a very long term process. Now however, for the first time not merely exclusive to SMEs there is a grant available that will help you make your business more eco-friendly without leaving a massive hole in your pocket.

The Climate Action Fund is part of the National Development plan which promises to change Ireland for the better by 2027, and will offer support to those businesses which assist the country in reaching its climate and energy targets. The purpose of the grants given will be to fund projects which would otherwise not be possible to complete. The fund will have an allocation of at least €500million leading up to 2027. The first call for applications to this fund will deal with larger scale projects scheduled for development in 2019-2020, which seek support in excess of €1million. Should you feel that your company may benefit from this, there is a rather small window of opportunity as the applications will be open from September 17th until October 1st so it would be imperative that you gather all required information and begin the process of collating this and having a project plan in place in advance of the application call opening.

The funding will be available to a wide range of projects which serve the greater interest of Ireland’s eco-awareness including:

  • Renewable Energy Projects.
  • Heating Projects.
  • Electrical Vehicle Charging Projects.
  • Environmental Protection Projects.
  • Energy Efficiency Projects.

This is of course only the first call for applications, there will be more over the course of the project and undoubtedly these will apply to a wide range of businesses and serve varied functions so if this first call does not apply to your company, we would advise keeping a close eye on the scheme for the next series of calls for applications.

Should you have any queries or require further information on this or any other business or financial matter please don’t hesitate to contact us here at EcovisDCA’s new head office, where as always we will be delighted to help.

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DCA PARTNERSDECLAN DOLAN & EAMONN GARVEY

The Links that make the Chain

Funding is something which is often at the forefront of every business owners mind. Whether yours is a large fully functioning company in need of some modernisation or upgrading or you are just starting out as an SME (Small or Medium Enterprise) and you require that extra financial push to get your fledgling business to leave the nest, finance is an essential part of business life. We would all like to think of ourselves as fully independent and to think of our business as being our baby, belonging only to us, but no company is an island and no company can exist and thrive in a vacuum, particularly during difficult financial times so seeking finance is often an ideal way to give your company an essential push to either get off the ground, or gain new ground for an existing company.

Recently, we have focused primarily on SMEs and we have discussed the newly widening availability of funding for these companies during Ireland’s continued recovery. Where in the past funding was a commodity in scarce supply, now there are more options available to choose from. This is welcome news for all business owners as gaining access to credit may be the ideal method to prevent your business from stagnating. Currently, many SMEs still struggle to gain finance and fail to realise the true potential of their business.

One new method of gaining funding comes from Linked Finance who pride themselves on connecting hard-working business owners with thousands of individual lenders, ordinary Irish people willing to lend to deserving companies who may otherwise not have the option of progressing. Linked Finance are happy to snip that tangle of red tape and reinvigorate P2P (Peer to Peer) lending to, in their own words

“Bring business lending back to basics; real people with savings lending to great local businesses at attractive interest rates.”

If bypassing the banks and gaining funding for your business through P2P lending sounds like something you could benefit then Linked Finance might be your first port of call. Providing approval for SME loans from €5000 to €250000 in just 8 hours, the process couldn’t be simpler. Your loan request will be auctioned to lenders and once approved by you, your funding can be processed within 48hours.

The requirements for Linked Finance are as follows:

  • Your business must be trading for 2 years
  • Have turnover in excess of €100,000
  • Positive cash flow
  • No history of missing payments
  • No outstanding judgements

Visit www.linkedfinance.com for more information.

Should you require any further guidance please do not hesitate to get in touch with us here at EcovisDCA where we will be happy to assist you in starting 2018 on the right foot.

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DCA PARTNERSDECLAN DOLAN & EAMONN GARVEY