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Revenue to withhold EWSS from firms who fail to file on time

Revenue to withhold EWSS from firms who fail to file on time.

As we are all aware, the emergency funds set up by the Government at the beginning of the Covid-19 emergency have seen many changes and adaptations over the last 18 months, both the Pandemic Unemployment Payment (PUP) and the Employee Wage Subsidy Scheme (EWSS) have continued to change and adapt to suit the current needs of the pandemic. Following on from the recent announcement of a move for Ireland from a period of continued restrictions to an easing into personal accountability and no further requirement to work remotely after late October, there are certain to be more changes and the likely phasing out of these schemes ahead.

We have often discussed in recent years, the many ways in which Revenue have automated their processes and functions to facilitate increasingly efficient compliance reviews, and in line with this, they have begun to increase checks on these schemes to ensure continued eligibility. As Covid restrictions begin to be lifted, new measures are required to ensure the smooth and fair operation of the scheme.

Revenue’s latest figures have shown that almost 41,000 employers were registered for the EWSS at the end of August 2021 and eligibility review forms have been issued to all. With only 70% of businesses having returned these forms, it is important to ensure that all business and financial information is up to date and presented to Revenue on time as Revenue will withhold all support payments from employers who fail to file their forms on time.

These previous deadlines had been amended on two occasions. Access to the EWSS will be effectively paused until forms are submitted. This system of pausing is in place from Sept 1st, once eligibility is confirmed, payments will resume. Revenue have clarified this by saying;

Where such businesses subsequently complete and submit the outstanding EWSS eligibility review forms, and thereby confirm they continue to meet the eligibility criteria of the scheme, they can resume claiming EWSS support […] Any subsidies claimed but not paid while EWSS eligibility review forms were outstanding will then also be processed for payment.”

We would advise getting eligibility forms submitted before the deadline each month for the previous month to avoid any delays or disruptions to your payments, which could financially damage your business. Should you have any concerns or queries on any business or financial matters please do not hesitate to contact us here at EcovisDCA where we will be happy to help.

Changes to Employee Wage Subsidy Scheme

Changes to the Employee Wage Subsidy Scheme

As we are all aware, the Employee Wage Subsidy Scheme (EWSS) has been an integral part of protecting Irish businesses during the Covid-19 pandemic emergency. The scheme has seen many changes and taken on new forms over the course of the past year, having been set up on an emergency basis but requiring updates and extensions as the pandemic continues. The latest extension to the EWSS states that The Finance (Covid-19 Miscellaneous Provisions) Act 2021 has allowed for the scheme to be extended through to December 31st, 2021.

With this extension come two major changes to how the scheme will operate going forward. As our country slowly continues the reopening process, these changes will be important to ensure that the scheme is allocated appropriately.

The two new key changes to the EWSS are as follows:

Change to Assessment Period.

The assessment period for eligibility to this scheme has now changed. It is now a requirement to show that your business will incur a 30% reduction in turnover* or orders for the 2021 calendar year as a direct result of Covid-19.
This can be assessed by:

Comparison to the 2019 calendar year if the business was in operation for the full year.
Comparison to the date of commencement to December 31st, 2019, if business commenced between January 1st and October 31st, 2019.
Comparison to projections for the 2021 calendar year, based on the assumption that the Covid-19 emergency had not occurred, if business commenced on or after November 1st, 2019.

*It is important to note that childcare businesses remain exempt from the 30% calculation criteria.

Mandatory Monthly Reviews to be Submitted Online.

A new key criterion to maintaining eligibility for the EWSS is the undertaking of monthly performance reviews for your business to ensure that your business continues to meet the eligibility criteria for this scheme.

A new form (EWSS Eligibility Review Form) has been created for this purpose, which must be submitted online on a monthly basis.

This form must be submitted by August 15th for June’s reviews and following on from this, will be expected by the 15th of each month.

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

Revenue's Debt Warehousing Scheme

Revenue’s Debt Warehousing Scheme

Revenue recently reminded businesses that were to resume trading, once lockdown ended, that their Debt Warehousing Scheme was still in operation. The process of debt warehousing essentially allows businesses to “park” their debts for a period of time in order to support cash flow when the company resumes trading. This will have been an invaluable asset to many companies, who may otherwise have struggled to reopen their doors following the Covid-19 lockdowns, however, this has naturally not come without drawbacks.

One issue for businesses to be aware of this scheme is if the company were availing of Debt Warehousing for PAYE employer liabilities, any directors or employees with a material interest in the company cannot claim for taxes deducted if these have been warehoused and not paid over to Revenue. This may mean that individuals could find themselves personally liable for PAYE deducted but not paid. While this is unlikely to become a major stumbling block, this is one issue that has not been widely spoken about but you very much need to be aware of it.

The system was put in place to ensure that cash flow would remain available to businesses at a time of need, with some 86,000 businesses availing of the scheme. The scheme has provided approximately €2.3 billion of cash flow to businesses and is now being extended to the end of 2021, with no interest during 2022 and a rate of 3% applying thereafter.

Revenue has assured businesses that payment terms will be flexible at the end of the term. This will also be determined by the company’s capacity to pay these arrears at the same time as paying their current liabilities. Collector General Joe Howley has stated that:

“This initiative gives viable businesses the opportunity to survive the economic shock of the pandemic and to hopefully thrive as the economy recovers. We will be in contact with each business that is availing with the Debt Warehousing Scheme to explain how the arrangements will operate for their business. The flexibility around debt that is warehoused will allow businesses additional time to get back on their feet after re-opening”.

It is important to remember that even businesses availing of this scheme must file all tax returns as soon as they are due.

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 game-changer for tax administration

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.

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 favorite cryptocurrency 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. But as a hub of tax advisory services, we can at least guide you regarding the tax treatment of the same.

Cryptocurrency is a digital currency in which transactions are verified and records are maintained by decentralized authority using cryptography rather than centralized authority (i.e. a bank). Bitcoin is the original and most popular cryptocurrency in the world. According to tax consultants, the feature that makes cryptocurrency a favorable investment among investors is its easy and cost-effective exchange across the globe.

Around this time last year, the Irish Revenue published guidance about the taxability of cryptocurrency transactions. According to Revenue’s guidance, tax transactions on cryptocurrencies are no different from other products/commodities (i.e. 33% CGT). However, you can reduce the amount of capital gains tax that you pay with the 1270 euro annual exemption. But it’s very important to note that this exemption goes across all of your gains which includes stocks, cryptocurrency and real estate etc.

Whether someone or an entity is deemed to be trading or not will depend on case law and many 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 also states 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 about 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. Given the high CGT rate, the highly encouraging 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 to calculate 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 about the tax treatment of same, they acknowledge that uncertainty exists given the evolving and ever-changing nature of the market.

For more information on Irish’s revenue guidelines, you can visit Revenue.ie. If you still have any queries on the above or any other tax-related matter, you can always take benefit of our tax advisory services. Our highly experienced accountants and business advisors will be glad to guide you in all your tax-related issues.
Full guidance can be found on Revenue.ie

Pandemic Unemployment Payment

Pandemic Unemployment Payment (PUP) 

2020 payments received: 

Payments received in 2020 under the Pandemic Unemployment Payment (PUP) are subject to income tax and universal social charge.

Individuals in receipt of PUP payments must complete an income tax return to receive their final statement of liability which will provide the final over or under payment for the year.

Revenue confirmed in September 2020 that PUP income tax and USC liabilities would become due at the end of 2020 and that the resulting liabilities could be discharged in one of two ways;

–    Pay any underpayment in full via My Account

or

–    Default option of discharging any underpayment arising due to the PUP payments over a four year period commencing in 2022 via a reduction in the annual tax credit entitlement.

As an example – Individual A has a €1,000 income tax underpayment for 2020.

This can be discharged as follows;

(1) Individual A can make payment of the €1,000 via My Account

or

(2) Revenue will reduce the individuals’ tax credits by €250 for the years 2022 to 2025 thereby recouping the underpayment via the PAYE system

2021 PUP payments:

In 2021 PUP payments will be taxes on a real time basis as follows;

The Department of Employment Affairs and Social Protection will notify Revenue on a weekly basis of the amount of PUP paid to each recipient.

Revenue will then collect any tax due by reducing the person’s tax credits and rate band.  To do this Revenue will “annualise” the weekly amount of PUP.

The adjusted tax credits and rate band are then applied on a Week 1 basis and the revisions will be reflected in the Revenue Payroll Notifications issued by Revenue to the person’s employer.

This process in 2021 should ensure there are no underpayments at the end of the year arising from PUP payments.

For more information on Pandemic Unemployment Payment visit revenue.ie

Or contact us

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.