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Revenue's Continued Removal Of Paper Transactions

Revenue’s Continued Removal Of Paper Transactions…

PAYE the Price for Digital Life…

In recent years, Revenue have begun to modernise their systems across the board and move to a largely paperless mode of working, including a full revamp of the PAYE system. This revamp of outdated systems is ongoing. Most recently, Revenue issued new guidance and information in April of this year regarding the introduction of a new electronic system of professional services withholding tax (ePSWT). With the recent updates to other Revenue systems, this new update is a welcome change and somewhat overdue to get all systems in line and ensure that no individual system is outdated and move further into a paperless system.

It is proposed that this new system will be introduced on July 1st, 2021 and will act as the final removal of the paper F45 form. This new solution will have far reaching effects for both employers and employees and will naturally require a period of adjustment. The paper F45 form will be replaced with new electronic ‘Payment Notifications’ on Revenue’s Online Services system (ROS). There will be ongoing updates and information available to view via the Revenue site so we would advise keeping up to date with all new updates. Revenue will add a new link to the ROS main screen entitled “Manage Professional Services Withholding Tax” which will link through to the new system. It is important to note that when inputting a payment notification, the tax registration number of the company in question will be required.

From the new “Manage Professional Services Withholding Tax” link, the next steps will differ based on your respective needs and whether or not you are registered for PSWT. Accountable individuals who have been registered will click into the “Payment Notifications” section, where they will then be permitted to input individual payment notifications and search previous payment notifications among other uses which we will discuss here.

Search Payment Notifications:

The search facility under the “Payment Notifications” will also offer the ability to amend or cancel payment notifications as well as generating acknowledgements for payment notifications submitted, which will be a handy tool for your files going forward.

Batch Payment Notifications:

Batch uploads can be completed by uploading a CSV file of payment notifications, which will greatly streamline this process.

Amend Payment Notifications:

One key feature of this system will be the ability to self-correct the record up until such a point as the F35 has been fully filed. Before this point, certain fields of the PN can be amended, and the accountable person will also have the ability to delete an existing payment notification or add a new one.

Payment Acknowledgements:

Accountable persons will be able to generate a payment notification acknowledgement PDF for all payment notifications. These acknowledgements can be given to as a tax record.

All accountable persons will be required to file an annual return detailing all payments during that tax year, the filing deadline will be Feb 23rd. This is intended to streamline the entire process from the current paper-based system and make it easier to process a refund once the paper F45 form is finally removed. The changes to this process will be as follows:

Old Process:
File a paper F45.
Deduct 20% from a specified person.
Give paper F45 to a specified person.
Remit the 20% to Revenue on a monthly basis as part of the F30 return.

New Process:
Make a Payment Notification on the ROS system as specified above.
Deduct 20% from a specified person.
Remit the 20% to Revenue on a monthly basis as part of the F30 return.

Something which is important to note as we make the change over to this new system is that as the change is happening mid-year there will be additional requirements for 2021, most notably there is a requirement that the F35 continue to be filed, but without the need for the schedule of payments after August 2021. There will also be a requirement for an additional F35. The traditional F35 will be required to be submitted by 23rd August 2021 for the period January to June 2021 including the usual schedule of payments. The F35 for the period July to December will be due by 23rd February 2021 and will not require any schedule of payments as we move into a more digital system.

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.

Taxation Implications on Bitcoin & Cryptocurrencies

Taxation Implications on Bitcoin & Cryptocurrencies

Yesterday went from bad to worse for the crypto bears and believers as they saw their favourite crypto currency Bitcoin crash almost 50% from its all-time high hit earlier this year. This also dragged down the values of other cryptos (‘alt coins’) making it a day to forget for all teams involved. We can’t tell you whether Bitcoin and Cryptos are here to stay as stores of value and means of currency exchanges, however, we can at least guide you regarding the tax treatment of same.

Around this time last year, the Irish Revenue published guidance in relation to the taxability or not of cryptocurrency transactions.

Irish Revenue’s guidance views transactions on the above as no different from other products/commodities – it comes down to traders and non-traders and so interpretation of the same is important.

Whether someone or an entity is deemed to be trading or not will depend on case law and a number of factors including but not limited to the motivation, the subject matter and the level of activity undertaken.

An individual carrying on a trade will be taxed at income tax rates while a company carrying on a trade will generally be chargeable to tax at 12.5%.

Irish Revenue’s guidance explains that for businesses that accept payment for goods or services in cryptocurrencies there is no change to when income is recognised or how taxable profits are calculated.

The guidance explains that where there is an underlying tax event on a transaction involving the use of a cryptocurrency, the tax law requires a record to be kept of it which will include any record in relation to the cryptocurrency. Therefore, income or corporation tax will apply to the resulting trading profits.

Where a person or company is not considered to be trading in the currency/asset, they will be subject to regular Capital Gains Tax (CGT) rules – any gains or losses arising on such disposals will be chargeable allowable for CGT purposes. The tax rate on same is currently 33%.

Given the high CGT rate, the highly encouraged Bitcoin philosophy and mantra to hold or ‘HODL’ the asset, together with Revenue’s currently limited visibility on such transactions, tax Revenue on such transactions may not yet prove to be a substantial yield for the exchequer.

Further to the above, where emoluments payable to an employee are paid in a cryptocurrency, the value of the emoluments for the purposes of calculating payroll taxes is the Euro amount attaching to the cryptocurrency at the time the payment is made to the employee. Returns to Revenue must be shown in Euro amounts and remittances made appropriately.

Revenue’s final line in the guidance states that a reasonable effort should be made to use an appropriate valuation for the transaction in question’.

So while they have tried to provide some guidance and to a degree some certainty with regard to the tax treatment of same, they acknowledge that uncertainty exists given the evolving and ever-changing nature of the market.

If you have any queries on the above or any other tax-related matter, please do not hesitate to contact our tax team who will be glad to guide you.

Full guidance can be found on Revenue.ie

Pandemic Unemployment Payment

Covid Restrictions Support Scheme (CRSS)

Payments received by employers :

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

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

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

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

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

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

Revenue 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

Revenue's Tax Bill

Revenue’s Tax Bill

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

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

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

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

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

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

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

For more information visit revenue.ie

Euro Currency

Employee Wage Subsidy Scheme (EWSS) Update

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

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

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

The Company must:

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

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

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

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

The SME Credit Guarantee Scheme

The SME Credit Guarantee Scheme

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

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

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

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

For more information visit Enterprise.gov.ie

The Phased Payment Plan

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.

Lay off procedures

Do I need to pay employees sick pay?

If an employee presents a medical certificate for any reason, including contraction of the virus or self-isolation, you should follow your sick pay policy as normal.

If an employee contracts Coronavirus (COVD-19) or is medically instructed to self-isolate, they will be entitled to received €305 per week from the Department of Social Protection. This payment is up to 2 weeks for self-isolation and for the duration of the illness if contracted.

Can I place employees on a period of lay-off?

A ‘lay-off’ situation can occur when there is an unexpected downturn in the business that is out of the Company’s control. If you have no work for the employee, and/or the Business is under extreme financial pressure, you can place an employee on lay-off.

Lay-off is viewed as being a temporary situation, so employers should be aware that if lay-off lasts for a certain length of time, the employee may be entitled to seek a redundancy payment.

If you are considering placing an employee on lay-off, you need to ensure you have a business justification for doing so. If your decision was ever challenged in the WRC, you will need to show your reasoning.

Can I put some staff on lay off while others work?

In relation to choosing employees for the reduction/short time, the criteria should be reasonable and applied in a fair manner. The last in, first out is deemed as appropriate, or by department based on the tasks that they are completing.

What is the process for placing employees on lay-off?

You must have a lay off clause in the employees’ contract of employment.

Lay Off

You as the employer would need to inform your employees that you are placing them on lay off and issue them with the relevant notification (Form RP9) confirming this.

Employees are not paid during a period of lay off, they can claim Social Welfare during this period. If an employee is on lay off from a business for a period of four weeks, they can request to be made redundant, if they have in excess of 2 years’ service. If this happens, there will be a cost involved for the company.

Short Time

When employees are placed on short time this requires that they be reduced to 50% or less of their normal working hours. When on short time employees may apply for Social Welfare to make up the rest of the week. It is important that the hours do not go above 50% while the period of short time continues.

 

With regards to redundancy claims under both of these systems;

Lay-off and short-time are viewed as being temporary situations, so  you as the employer should be aware that if either the lay-off or short-time working lasts for a certain length of time, the employee may be entitled to seek a redundancy payment.

This occurs when the employee has been laid off or kept on short-time (or a combination of both) for either

  • At least four consecutive weeks or,
  • within a 13-week period, for a series of at least six weeks of which not more than three were consecutive

Within 4 weeks of either of the above situations ceasing, the employee can decide to claim redundancy. The claim must be made on the form RP9. Once the employer receives this form s/he has two options:

  • S/he can accept it and pay the redundancy lump sum thereby accepting that there is a termination of employment; or
  • S/he can give a counter notice within seven days to the employee contesting their claim for redundancy.

Counter Notice

By issuing a counter notice the employer promises that within four weeks the employee will be employed for a period of 13 consecutive weeks.

If this does not happen, the counter notice is invalid and the employee is entitled to a redundancy payment. The employee is entitled to statutory redundancy only. S/he is not entitled to a notice payment, as s/he is the party terminating the employment.

Form RP9 – Lay-off and short time procedures

Revenue Irish Tax Firm

Revenue Announce Measures during Covid 19 Outbreak

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.