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Revenue’s game-changer for tax administration…

As we have discussed recently, the Revenue system has been undergoing massive amounts of welcome changes in recent years. As Revenue continues to invest in the future of their systems, how we do business daily is likely to shift along the way.

Revenue have become increasingly advanced and sophisticated in their systems over the past couple of years and their systems will continue to evolve. Where tax administration was once a long and protracted process, Revenue have managed to create a game-changing and more sophisticated system to catch non-compliance by investing in their IT and data analytics in a much more streamlined fashion.

“A system is only as good as the information it runs on – Revenue’s ability to collect vast and detailed information, as well as its ability to sort and collate this into useful data means their vigilance and efficiency is increasing year on year,” says Cian Rowlands, a tax manager in Ecovis DCA.

Revenue’s recent focus on the area of data analytics allows them to follow a more risk-assessment-based approach to tax issues with one leading tax commentator noting:

“Revenue have become much more advanced and sophisticated in its use of analytics and e-audits in recent years. Taxpayers can see it for themselves when they are filing returns and paying their tax online.

Revenue is now better positioned to tackle non-compliance. It is using data to determine which returns are higher risk and realigned its operating structure in 2018 to complement that. Revenue is focusing its resources on those cases which it believes will most likely deliver a yield on an audit.”

Revenue now utilises a risk-evaluation tool called the Risk Evaluation Analysis and Profiling (REAP), which is a highly sophisticated system that takes data from numerous sources and cross-checks this data against tax returns filed in order to attribute a risk ranking to the individual. Higher risk individuals are more at risk of being selected for audit.

This system continues to advance, and Revenue continues to refine the process. This increased sophistication means that Revenue can now carry out digital audits on an individual if an issue is flagged. As well as this, Revenue’s appeals system has been streamlined recently to begin to clear the backlog caused by the pandemic.

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.

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.

Getting Your Business Brexit ready

As we all know, Brexit will formally exit the European Union on 31st December 2020, and it is vital for Irish businesses to prepare for the changes ahead.

The Department of Enterprise has released a Brexit readiness checklist which we recommend consulting in full to ensure that your business is prepared, and to contact your Local Enterprise Office for information and assistance. We have compiled the main points to consider here.

 

Supply Chain:

If your business trades with Britain, you will need to take steps to reduce the impact of Brexit on your business and your supply chain.

  • Contact your suppliers and logistics carriers in Britain.
  • Look into the charges that may apply to you when your product reaches Britain, even as a stop-off.
  • Discuss with your Local Enterprise Office.
  • Look into the Brexit Loan Scheme to assist with cashflow.

 

Customs:

Following Brexit, you will likely be required to comply with new customs obligations. New declarations for both import and export will be necessary. There are a number of steps which can be taken in advance to limit the impact of this change on your business.

  • Obtain an EORI number if you have not already – This can be obtained via the Revenue website and will be essential for trade with Britain going forward.
  • Decide if you wish to hire an outside customs officer or process customs in-house.
  • It may be necessary to VAT register in the UK.
  • Ensure that you have a ‘Customs Guarantee’ in place. Authorisation for this may be required from Revenue, and this may provide some security against unforeseen costs.
  • Check with your Local Enterprise Office if they provide customs workshops.

 

Duty:

Beginning January 1st, Customs Duty will apply to the import of some goods from Britain. Here are some steps you can take now to prepare.

  • Classify your goods into the appropriate categories.
  • Identify the cost implications customs duty may have on your products.
  • Apply to Revenue for a VAT and Duty deferment, which allows you to defer payment to the 15th of the month.
  • Review contracts with your suppliers and logistics carriers.
  • Assess your accounts department for readiness to deal with these changes and adapt as needed.

 

Certification: 

There may be new certifications and licenses required for trade with the United Kingdom going forward, and it will be important to ensure that you are compliant with EU rules for trade outside of the union. The below are some steps that can be taken to mitigate these issues.

  • Check whether your current licenses and certifications will be valid after the transition period.
  • Check that your product meets all required guidelines for export outside of the EU.

 

Currency Movement:

Since the result of the Brexit vote, Sterling has been somewhat volatile and is expected to remain so for some time, it is important to consider the impact of this weakened currency on your business.

We recommend consulting with the Revenue website and your Local Enterprise Office for information on further steps that can be taken to ensure that your business is Brexit ready. Let’s get all businesses prepared for Brexit and do what we can to start 2021 off on a good foot.

As always, we are available and happy to help should you require any further information or guidance on any business or financial matters.

 

 

Revenue Compliance Checks on TWSS Payments

As we are all aware, there have been a number of supports in place over the past number of months in order to safeguard businesses and employees during the Covid-19 crisis. One of the major supports in place that has changed format a couple of times this year but has been invaluable for many businesses is the Temporary Wage Subsidy Scheme (TWSS). This scheme allowed businesses to keep employees on their payroll during times the office may have been closed, or the business came under financial strain due to the pandemic, by having the Government cover the majority of an employee’s wage and the employer being given the option to top this up to the full amount. The subsidy has been extended into the New Year under new rules.

 

Unfortunately for some businesses, they may find themselves needing to pay back funds received through the scheme, as it has been reported that while the majority of companies have satisfied Revenue’s requirements for the scheme, as many as 66,500 or 10% companies in receipt of funds between March and August have failed to submit proof that these funds were used for the intended payroll purpose of paying employee wages. Compliance checks are not a new phenomenon with Revenue or TWSS as these have been ongoing since the change of the scheme in September, with some companies found in breach and required to repay their payments.

 

These businesses may be required to pay back a hefty €300m in subsidy repayments if they fail to satisfy Revenue’s reconciliation process before the timer runs out. These employers will be treated as owing the full amount paid out to them over this time period. It is worth noting that in addition to this, any companies failing to enter into the process will also find themselves excluded from Revenue’s debt warehousing scheme and will not be allowed to suspend their tax payments.

 

The first stage of the reconciliation process involves submitting the data as required as proof of how the funds were allocated, while the second stage could see Revenue assess employee payslips individually to assess the amounts paid against the amount received from the government, to ascertain if any outstanding amounts are in need of being returned.

 

We hope that this information will be of interest and use to you and that 2021 holds success and prosperity for you and your business. As always, we here at EcovisDCA are available should you have any concerns or queries about any business or financial matters.

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.

Covid 19 – Update on Social Welfare supports for Employees and Employers

  • Social Welfare measures for Employees & the Self Employed
  • Process for Employers for keeping staff on the Payroll
  • The process for Refunds to Employers who engage with the scheme

COVID 19 – Pandemic Unemployment Payment

If you have lost work due to a downturn in economic activity caused by COVID-19 you can apply for the new  COVID 19 – Pandemic Unemployment Payment at this link – https://www.gov.ie/en/service/be74d3-covid-19-pandemic-unemployment-payment/

This new payment quickly delivers income support to the unemployed (be they self-employed or employees) for a 6-week period.

It is designed to provide income security for a period during which you can apply for a full Jobseekers payment (and receive any additional entitlements backdated).

You can apply for the Pandemic Unemployment Payment by filling in a one page application at the link above and returning to PO BOX 12896, Dublin 1. by FREEPOST. You do not need to visit an Intreo Centre to apply.

 

How to Qualify

Both employees and self-employed people can apply for the new COVID-19 Pandemic Unemployment Payment.

You can apply for the payment if you:

  • Are aged between 18 and 66 years AND
  • You have lost employment due to the COVID-19 (Coronavirus) pandemic
  • And it also includes people who have been put on part-time or casual work.
  • Students who have lost employment can also apply.

The COVID-19 Pandemic Unemployment Payment is paid at a flat rate of €203 per week for 6 weeks. It is equivalent to the jobseeker payment rate.

If you are getting another social welfare payment and you have lost your employment, it can be paid in addition to this.

 

Employers – Keeping Staff & Refunds

Revenue has worked closely with Department of Employment Affairs and Social Protection (DEASP) to provide an option for employers to make this payment to their employees through the normal payroll process. The amounts paid to employees under the scheme are not subject to tax, USC or PRSI.

Employers are encouraged to facilitate employees by operating the scheme. The amounts paid to employees and notified to Revenue will then be transferred into the employer’s bank account by Revenue.

This reimbursement will, in general, be made on a ‘next day’ basis. It will ensure a speedy payment process for employees and minimise the hardship for employees who are temporarily laid off. Refunds of income tax or USC that an employee may be entitled to because of being laid off will also be administered by the employer and will be repaid (to the employer) through the scheme.

The scheme can be operated for all employees for whom a payroll submission was made by the employer in the period from 1 February 2020 to 15 March 2020. Where employees have already been laid off and their employer has ceased their employment, they can apply directly to DEASP for the payment.

 

Who does the scheme apply to?

  • Employers who have temporarily laid off staff as a result of the impact on their business of the COVID-19 (Coronavirus) pandemic
  • Employers that keep their staff on payroll and have not ceased the employee(s) with Revenue
  • Employees for whom a payroll submission was made by the employer in the period from 1 February 2020 to 15 March 2020
  • Employers that are unable to make top-up payments over and above the emergency payment of €203 per week.

Making an application for the Refund Scheme

Employers, or their agents, apply to Revenue to operate the scheme by carrying out the following steps:

Log on to ROS myEnquiries and select the category Employer COVID -19 Refund Scheme’.

Read the declaration and press the ‘Submit’ button.

Log on to ROS and in ‘Manage bank accounts’, ‘Manage EFT’, ensure that the bank account details provided are correct.

 

Key features of the scheme

The employer will make the payroll submission to Revenue on or before each pay date.

Employers should contact their payroll software providers for assistance in respect of payroll to be processed under this scheme.

The employer runs the payroll as normal, entering the following details for each relevant employee:

 

PRSI Class set to J9

A pay amount of €0.01 (there must be some pay entered for the payroll to run).

A non-taxable amount of €203. No other payment amounts are made by the employer to the employee and all temporarily laid off employees are granted the €203.

The payroll submission must include pay frequency and period number.

No other payments are made by the employer to the employee for the applicable week(s) and all temporarily laid off employees receive the €203 per week.

Income tax, USC and PRSI are not deducted from the €203 payment.

Any Income Tax and USC refunds that arise as a result of the application of tax credits and rate bands can be repaid by the employer and this amount will also be refunded to the employer.

The employee must confirm to the employer that they have not, and will not, claim a payment from DEASP whilst the employer makes this payment through the payroll.

Employers will be asked to advise employees to make a Jobseeker’s Benefit claim via the MyWelfare.ie online portal (so that the employee(s) can access qualified dependant payments if appropriate).

Based on the information provided in payroll submissions, Revenue will credit €203 per employee per week to the employer’s bank account recorded in ROS.  The credit will include the reference COVID Employer Refund. (The main identifiers include Employer Number Gross Pay of €0.01, J9 PRSI class, Pay Frequency and Employee PPSN, Employment ID).

Revenue will credit the employer bank account for payroll submissions received before 2:00 PM each day.  Depending on the individual bank, the refund should be with the employer on the next banking day.

If the employee(s) resume employment with the employer, or obtains other supports from DEASP, or secures employment elsewhere, the employer will not include the employee(s) concerned in future submissions.

 

Guidance/Information

For general issues relating to the Scheme, employers should contact Revenue’s National Employer Helpdesk via the myEnquiries system, providing details of the query and a direct dial contact number.

Employers should make sure to select ‘Employer’s PAYE’ and then ‘Employer’s PAYE General Enquiry’ when submitting the query through myEnquiries.

 

Budgeting for the Budget

As the Budget announcement approaches, conversation has turned largely to conjecture over what changes may be made to safeguard against Brexit related issues. As you will all be aware, we here at EcovisDCA are massive supporters of Small and Medium Enterprises (SMEs). These vital businesses are enormously important to Irish business in general and due to their size are vulnerable during this uncertain time.

Recently Dublin Chamber Chief Executive Mary Rose Burke spoke out about the importance of safeguarding these businesses and enabling them to not only survive but to thrive in  a post-Brexit world and suggested that Burget 2020 must endeavour to help SMEs to compete with larger, more economically attractive companies. In order to face Brexit head on, Burke suggests that Capital Gains Tax may be the first port of call as the current set up of an overall 33% rate is damaging to small companies and favours attracting larger companies. It is suggested that this be reduced to 20% for all unlisted trading firms and should take into account the level of risk taken by entrepreneurs in order to protect these important business owners.

“We need to foster an entrepreneurial environment and strengthen Ireland’s indigenous business base.”

Given that SMEs form over half of all Irish business operations, it would be wise to begin investing heavily in the entrepreneurial spirit that exists in our country. The Dublin Chamber has stated that the UK is ahead of Ireland in terms of supporting Irish SMEs, and proposes that we follow suit. The current taxation system which applies across the board actively encourages investment in larger multinationals over SMEs. As these large companies are such a small fraction, it is easy to see how smaller businesses may suffer further blows following Brexit, as Burke suggests;

“[Large multinationals] are already more attractive for entrepreneurs. We need to look to improve our competitiveness in ways that are under our control. […] with Brexit on the horixon, it is vital that we react and fight back.”

There is a concern that if changes are not made in the coming Budget, the UK may eclipse our small island in terms of attractiveness to foreign trade which could see significant damage dealt to our economy. As such a long term plan in the coming Budget would be a welcome safety net for Irish SMEs

As always, we will be reporting on this year’s budget as it happens and keeping you up to date on what these changes will mean for you and your business. Should you have any concerns or queries on any business or financial issues, please don’t hesitate to contact us here at EcovisDCA where we are always happy to assist.

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DCA PARTNERSDECLAN DOLAN & EAMONN GARVEY

The EORI – In Advance of Brexit

What’s Your Number?

As you will all know, we have spoken many times over the past year about Britain’s exit from the European Union, the term ‘Brexit’ has been utilised so often by so many people over the past few months that it has almost lost all meaning, with various extensions making the exit seem more like a myth than an impending reality. With so much uncertainty surrounding our position in this puzzle it has been quite difficult to predict where we will stand, with a ‘Hard Brexit’ with Irish borders becoming more and more likely as the months go on. There are a couple of things that we do know for certain, by virtue of the rules surrounding the European Union, today we will be focusing on one such change which will directly affect all companies with trade dealings with the United Kingdom.

Following the eventual Brexit, there will be a new requirement for all Irish companies trading with the UK. From October, any company trading with the UK will need an EORI (Economic Operators Registration and Identification) Number in order to trade. This number is a requirement for all traders who import or export goods into or out of the European Union, the number is valid throughout the EU and is used as a reference number for customs authorities within any EU member state. As the United Kingdom will soon exist outside of the boundaries of the European Union, this number will now be a requirement for all Irish companies trading with the UK.

You can obtain your EORI number online via the Revenue website, and there is also an eLearning tool available regarding the EORI numbers on the European Commission website. If you are not already familiar with this system prior to Brexit, we would suggest making full use of these resources in advance so that you understand the requirement and are prepared well in advance of any changes due to Brexit coming into effect.

In order to utilise the Revenue service to set up your new EORI number you will need the following:

  • Revenue Online log in details.
  • A valid Revenue Online Services (ROS) digital certificate.
  • A registration for customs and excise in ROS (if you do not have this, you will need to register for customs and excise before beginning the EORI process.).

The Revenue Online System will then take you through the rest of the process. Should you have any concerns or queries about any business or financial matters, please don’t hesitate to contact us here at EcovisDCA where we are always happy to be of service.

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DCA PARTNERSDECLAN DOLAN & EAMONN GARVEY

 

Planning Your Best Exit Strategy

We have discussed in the past, the importance of having a long-term plan for your business, particularly for when you are no longer in a position to run the company yourself. The importance of an exit strategy or long-term plan can not be overstated for businesses of all sizes, particularly small and medium enterprises (SMEs). It is as always advisable to stay abreast of current issues and changes that may affect the long and short term plans you have in mind for your business and in this vein, there has been some cause for concern in recent days regarding ways that taxation could inhibit future planning.

A new report issued by PwC this week has stated that current tax rules which hit the transfer of family businesses are putting both jobs and companies at large in danger. These rules make options incredibly limited for business owners as they limit owners passing on their business to family members while they are living. Some anomalies to the system in this respect mean that the new business owner could find themselves incurring high tax costs that would potentially place additional pressures on the business and put it at risk.

PwC have given some suggestions on changes they would like implemented in the next budget to protect business owners and entrepreneurs in the event of passing their business on while still living. One such suggestion is the removal of the current cap of €3million on the value of business assets which can benefit from Retirement Relief. There is also calls for the Entrepreneurial Relief Capital Gains Tax threshold to be reduced to allow further relief to these businesses as well as increasing the lifetime limit applicable and reducing current restrictions which may exclude many. It has also been suggested that tax relief options could be made available.

Consultation with the Government for this process is ongoing and submissions will close on May 24th and there are hopes that there will be changes announced in the next Budget to combat this issue and make the family handover of businesses a smoother and more profitable process. The transition of a business is inevitably a stressful and concerning time, so any changes that can be of benefit and ensure the longevity of an existing healthy business should certainly be embraced.

Should you have any queries or concerns on any business or financial matters, please do not hesitate to contact us here at EcovisDCA where we are always happy to help you and your business.

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DCA PARTNERSDECLAN DOLAN & EAMONN GARVEY

Revenue Commissioners New Debt Management System (DMS)

Onward, to the Future

The past number of months have been a time of increasing change for Irish businesses. From large scale changes to payroll systems to the clamping down of Revenue on all forms of tax evasion and tax fraud. These have been major changes to the ways in which Irish companies do business day-to-day and are hoped to be a solution to some long-term issues facing Irish business life, as it is hoped it will all lead to smoother business operations and less issues facing the Irish tax system.

The season of change continues onwards as it was recently announced that The Revenue Commissioners were set to release a new system for debt management, one which will be more technologically advanced than previous iterations and which will assist them in chasing down more unpaid tax, particularly in the sector of SMEs (Small and Medium Enterprises).

Revenue’s new system entitled DMS (Debt Management Services) was launched just recently and promises to utilise high-tech means to target and deal with a wider range of tax payer. Whilst this may seem like a frightening prospect for SMEs, it is in fact a positive step towards ensuring that all Irish businesses are compliant, and that smaller business need not suffer the consequences of the failures of their larger brethren. The system will be able to target businesses and individuals who may previously have been too expensive to identify and pursue.

A spokesperson for Revenue has stated of the new DMS system that it will:

“Deliver significant increased capacity to manage and support compliance and tackle non-compliance” and will “enable Revenue to review customers with lower turnarounds on a more regular basis”.

So, whilst this means that SME’s will of course naturally fall under the Revenue microscope more often than previous, it is a step in the right direction for the future of business in Ireland, as it is set to join the Payroll Modernisation system in making it easier and more transparent for businesses to submit documentation and queries as the spokes person went on to say:

“The new system is fully online, allowing documentation to be uploaded electronically. It gives customers greater flexibility to manage their payment schedule and make certain alterations to suit their circumstances.

We as always advise to ensure that all your documentation and tax files are in order well ahead of time to ensure that you do not face further issues going forward. Should you have any queries or concerns, our doors are always open here at EcovisDCA.

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DCA PARTNERSDECLAN DOLAN & EAMONN GARVEY