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The Minister for Finance, Paschal Donohoe has today (Friday) announced changes to a number of the COVID support schemes available to businesses, in particular for those businesses that were most severely impacted by the public health regulations introduced last December.
An extension to the Employment Wage Subsidy Scheme (EWSS) to support those businesses and a number of clarifications in relation to the Covid Restrictions Support Scheme (CRSS) and Tax Debt Warehousing Scheme were agreed by Government at the Cabinet meeting today.
The legislative aspects associated with these changes will be addressed by primary legislation to be introduced in the coming weeks. In the meantime Revenue will update its guidance on each of the schemes shortly.
As part of Budget 2022, the government set out the future direction of EWSS including its graduated exit strategy. These arrangements were subsequently enhanced in response to the public health situation, namely the extension of the enhanced rates of subsidy for a further two months (across December 2021 and January 2022) and the reopening of the scheme for certain businesses as announced on 9 and 21 December 2021 respectively.
The government agreed today that businesses availing of EWSS that were directly impacted by the public health Regulations introduced last December, will receive additional support under the scheme for a further month to assist these businesses as they fully reopen and emerge from the restrictions.
Such businesses will continue to receive the enhanced rates of subsidy for the month of February and the graduated step-down in subsidy rates, as previously announced, will be delayed by one month with such firms continuing to receive support under the scheme until 31 May 2022.
From 1 February 2022, most businesses, apart from those that were directly impacted by the public health restrictions of last December, will move to the reduced rate of support of €203 per employee, followed by the flat rate subsidy of €100 per employee for the final two months the scheme of March and April 2022.
It should be noted that the full rate of Employers’ PRSI will be reinstated with effect from 1 March 2022 for all businesses, as announced in Budget 2022 and legislated for in the Social Welfare Act 2021.
In relation to the Tax Debt Warehousing Scheme, and the decision by Government last month, to extend the period where tax liabilities arising can be warehoused to the end of Q1 2022, for all taxpayers eligible for COVID-19 support schemes, it has now been agreed that this date will be extended to 30 April 2022 to facilitate the two monthly VAT return for March/April.
A number of clarifications were noted in relation to the CRSS as follows:
The Minister for Finance, Paschal Donohoe TD said:
“Today is an important day for our society and economy as we seek to ease the public health restrictions and reopen all sectors of our economy. The EWSS has been extremely successful in maintaining employment across the whole of our economy during this pandemic.
"It is now time to adjust our focus towards an exit from the scheme in a structured and orderly way. This is important in everyone’s interests - businesses, employees, the wider body of taxpayers – as the scheme cannot continue indefinitely. As such, most businesses will move to the reduced rates of EWSS subsidy from the 1st February 2022 onwards and continue on the exit path as previously announced until the scheme closes on 30 April 2022.
"However, I intend to provide additional support to those businesses that were directly impacted by the most recent public health regulations. Affected businesses will continue to receive the enhanced rates of support for a further month and the exit path from the scheme for such businesses will be delayed by a month.
"CRSS has been an important and successful support payable at times when businesses most needed additional help with their fixed costs, and has provided some €717 million in direct payments in respect of over 25,000 business premises since its introduction and over €13.4 million in payments to businesses directly impacted by the latest public health restrictions in place since 20 December.
"The facility to avail of the Tax Debt Warehousing Scheme has also offered valuable and practical liquidity support to businesses in difficult trading periods during the pandemic. The objective of this scheme is to allow firms some help to recover, thereby helping to guarantee their long-term economic viability and survival. This further extension will allow businesses who have been most impacted some additional time to recover before their tax liabilities have to be paid. Their period of zero interest will continue until 30 April 2023, with interest at the reduced rate of 3% p.a. payable thereafter until the debt is paid down."
The EWSS represents a substantial and key part of the government response to the current crisis. As part of Budget 2022, the government agreed the future of EWSS including its graduated exit strategy. These arrangements were subsequently enhanced in response to the public health situation, namely the extension of the enhanced rates of subsidy for a further two months (across December 2021 and January 2022) and the reopening of the scheme for certain businesses as announced on 9 and 21 December 2021 respectively.
Under these arrangements, the EWSS will revert to the original two-rate subsidy (€151.50 and €203) on 1 February 2022, followed by a flat rate subsidy of €100 in March and April 2022. The scheme will end on 30 April 2022. These arrangements will apply to most businesses.
Businesses that were directly impacted by the specific terms of the public health regulations introduced last December will see a one month deferral to the above arrangements. Such businesses will continue to receive the enhanced rates of subsidy for a further month (February 2022), the original two-rate subsidy will apply for one month (March 2022), followed by the flat rate subsidy of €100 for a further two months (April and May 2022).
This means that businesses eligible for EWSS and directly impacted by the public health regulations introduced last December will follow the same graduated exit path in place for all businesses but it is deferred by one month. The additional EWSS support will be beneficial to businesses in the hospitality and arts and entertainment sectors that have been directly impacted by health regulations.
It should be noted that the full rate of Employers’ PRSI will be reinstated with effect from 1 March 2022 for all businesses, as announced in Budget 2022 and legislated for in the Social Welfare Act 2021.
With the current trajectory of the public health situation being broadly positive and in light of the government’s announcement today to ease restrictions, it is necessary to move towards exiting the scheme for the majority of businesses. This is important for the Exchequer finances given the very substantial cost of the scheme, while also being important for the functioning of the labour market and in the longer term interests of the businesses themselves.
By its nature the EWSS is a demand-led scheme and the cost is driven by the number of employers and employees supported by the scheme. The latest data from Revenue (20 January) indicate that payments of €6.196 billion and PRSI credit of €966 million have been granted to 51,900 employers in respect of 708,300 employees.
For the month of December (the latest available monthly data), 24,000 employers availed of EWSS in respect of 279,400 employees, receiving subsidy payments of almost €373.8 million and PRSI credit of €55 million.
In terms of the breakdown of the support on a sectoral basis, the accommodation and food services sector (broadly the hospitality sector) has received EWSS payments of over €1.668 billion since the introduction of the scheme, accounting for the largest share across all sectors at 26.9%. The wholesale and retail trade sector received EWSS payments of over €769 million (12.4% of all payments), followed by the construction sector with EWSS payments of almost €517 million (8.3%).
Based on provisional data for December in terms of the number of employments supported by the EWSS, the largest beneficiary is the accommodation and food services sector (approximately 117,000 employments or 42%), followed by wholesale and retail trade (approximately 25,000 employments or 9%).
The Covid Restrictions Support Scheme (CRSS) was put in place in Finance Bill 2020, and amended by Finance (Covid-19 and Miscellaneous Provisions) Act 2021 and provides for a support payment to businesses where they are required to either prohibit or significantly restrict customers from accessing their business premises to acquire goods or services, with the result that the business either has to temporarily close or to operate at a significantly reduced level. The scheme operates with reference to the public health regulations in force at any time.
Claims in respect of 2,700 premises have been received since 20 December 2021 with €13.4 million in payments made to businesses. Since its introduction, a total of €717 million has been paid under the scheme in respect of 25,600 premises. A claim can be made up to 8 weeks from the beginning of a claim period.
In light of the further restrictions imposed from 20 December, the government agreed that businesses in the hospitality sector that are required, under specific terms of public health regulations, to close at 8pm each night from 20 December 2021 to 31 January 2022 would be regarded as being significantly restricted from operating for the purposes of the CRSS. Businesses that were eligible to apply are those that would normally stay open later than 8pm such as bars, restaurants, nightclubs and hotels as well as indoor entertainment venues such as cinemas and theatres.
In addition, the turnover threshold was increased from 25% to 40%, which means that an eligible business could make a claim under the scheme where the turnover of the person in respect of the relevant business activity in the claim period was 40% (or less) of their average weekly turnover in a reference period (which is 2019 in the case of most businesses).
Newer businesses established during the period 13 October 2020 to 26 July 2021 may access supports under the scheme where eligibility criteria are met for the most recent period of restrictions (20 December – January 2022).
Revenue has published revised CRSS guidelines, on its website. https://www.revenue.ie/en/corporate/press-office/budget-information/2021/crss-guidelines.pdf
In response to the COVID-19 pandemic, the government has legislated to allow for certain tax debts associated with the COVID-19 crisis to be deferred or ‘warehoused’. The Tax Debt Warehousing Scheme was made available to support businesses that are experiencing tax payment difficulties arising from the COVID-19 pandemic. The scheme, applies to VAT debts, PAYE (Employer) debts, certain self-assessed income tax debts and overpayments of both the Temporary Wage Subsidy Scheme (TWSS) and the Employment Wage Subsidy Scheme (EWSS). Access to the scheme was automatic for SMEs managed by Revenue’s Business and Personal Divisions and by agreement with larger businesses managed by Revenue’s Large Cases and Medium Enterprise Divisions. To qualify for debt warehousing, businesses must continue to file all tax returns, even though the liability cannot be paid.
For all taxpayers eligible for COVID-19 support schemes, Period 1, the period during which tax debts may be warehoused is extended to 30 April 2022, and tax debts can then be ‘parked’ interest-free for the following 12 months. At that point the warehoused debt may be paid in full without incurring an interest charge or can be paid through a tailored phased payment arrangement starting 1 May 2023 at a significantly reduced interest rate of 3% per annum. This compares to the standard rate of 8% or 10% per annum that would otherwise apply to such debts. Any tailored phased payment arrangement will take account of the taxpayer’s particular financial circumstances and can be extended over a longer timeframe as required provided current liabilities continue to be paid as they fall due.
For other taxpayers, Period 1 ended on 31 December 2021 and tax debts are ‘parked’ until the end of 2022.
98,000 individual businesses are availing of Debt Warehousing. As of end-December 2021, €2.9 billion of liabilities were warehoused, this can be broken down as follows:
Warehousing arrangements involve entering into a payment agreement with Revenue for the repayment of the liabilities. The duration of this agreement is based on the individual circumstances involved.
Further information is available on Revenue website - https://www.revenue.ie/en/starting-a-business/paying-your-tax/debt-warehousing/index.aspx