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The government has today (Tuesday) agreed a number of changes to the major support schemes available to businesses affected by the latest public health restrictions which came into effect this week.
Changes will be made to the Employment Wage Subsidy Scheme (EWSS), the Covid Restrictions Support Scheme (CRSS), and the tax debt warehousing scheme to expand the supports available to businesses affected.
The EWSS will continue to apply to the vast majority of businesses affected by the recently updated restrictions, with a continuation of the enhanced rates as announced on 9 December.
In addition, the government today agreed that the EWSS will reopen for certain businesses who would otherwise not be eligible and that such businesses can continue to be supported until the expiry of the scheme on 30 April 2022.
The new arrangements for EWSS will provide employers who have previously availed of EWSS but who are no longer eligible, with the opportunity to re-qualify for the scheme where they meet certain conditions.
Employers that qualify for re-entry to the scheme will receive support on a prospective basis from 1 January 2022 onwards, and they can remain in the scheme until its expiry date (30 April 2022).
The public health restrictions currently in force, require nightclubs and discotheques to remain closed until 9 January 2022 and they are eligible to receive the CRSS.
Following the announcement of further restrictions on Friday 17 December, the government have agreed that the CRSS will be made available to those businesses (hospitality and indoor entertainment) that have been significantly restricted from trading. Up to now, a business was required to close or significantly restrict access by customers to its premises to qualify for the Scheme. This was agreed in recognition of the challenges facing these businesses.
The turnover reduction criteria will be increased from no more that 25% of 2019 turnover to no more that 40% of 2019 turnover, and new businesses established between 13 October 2020 and 26 July 2021 will now be eligible to apply for the scheme.
Currently any business established after 12 October 2020 is not eligible for CRSS. The government has now agreed to allow new businesses established between 13 October 2020 and 26 July 2021 to be eligible to apply for the scheme.
Revenue has indicated that the scheme will be operational for the affected sectors this week. Further details for businesses will be set out in Revenue guidelines to be published shortly.
The government also agreed to extend the tax debt warehousing scheme to allow the period where liabilities arising can be “warehoused” to the end of Q1 2022 for taxpayers eligible for the COVID-19 support schemes; this means that interest free period for those taxpayers will now be 1 April 2022 to 31 March 2023.
Tánaiste and Minister for Enterprise, Trade and Employment, Leo Varadkar TD said:
“Since the start of the pandemic we have aimed to minimise the loss of life, protect the health service and save as many jobs and businesses as possible. This new package will protect jobs and businesses adversely affected by the recent COVID restrictions.
“The EWSS will open to some new businesses and reopen to businesses which had been able to come off the subsidy but are now back in difficulty. The rules for the CRSS will be relaxed so that many more businesses, whose turnover is down due to government regulations, can receive the payment. It will also be paid to affected business that decide to close because they can operate viably with restricted hours. Separately, tax warehousing will be extended into the first quarter of 2022 which is another really important measure in terms of cash flow.
“We’ve already extended the Employment Wage Subsidy Scheme to the end of January at the full rate to help pay the wages and encourage employers to keep people on the payroll. The Pandemic Unemployment Payment has been reopened to new entrants and re-entrants who cannot work due to restrictions. We have introduced sectoral schemes for aviation, sporting bodies and the arts. We know these are really difficult times for many businesses, but as we approach the end of 2021, I want to thank Irish companies for co-operating with the public health advice, for keeping the public and their own staff safe, and for your perseverance in the face of a relentless pandemic.”
The Minister for Finance, Paschal Donohoe TD said:
“The government recognises that these restrictions come at a bad time for businesses in the hospitality sector and is putting changes in place that will provide supports equivalent to that which was in place during Level 5 restrictions earlier this year.
“I intend that the legislative aspects associated with the revised arrangements for EWSS, CRSS and the tax debt warehousing scheme will be addressed by primary legislation in early 2022. In the meantime, the Revenue Commissioners have confirmed to me that they can operate the revised arrangements on an administrative basis pending the legislation.
“The government has always committed that there will be no cliff-edge to supports for businesses while accepting that such supports cannot continue indefinitely. The changes agreed today by Government will help the hospitality sector at a time when it is most vulnerable.”
Minister for Public Expenditure and Reform, Michael McGrath TD said:
“I fully recognise that the public health restrictions which have been put in place represent an enormous challenge for businesses and employees throughout the country.
“This is a hugely important time of the year for the hospitality and entertainment sectors, and restrictions on their ability to trade in a normal way require a comprehensive response on the part of Government. I believe we have acted quickly and appropriately to assist businesses, and we are committed to continuing supports in line with the evolving public health situation.
“It is vitally important for employers to maintain links with workers and we would urge them to keep the workers in employment wherever possible. I appreciate that these supports are not a substitute for normal activity but they will assist businesses to get through this difficult period and be in a position to benefit from the removal of restrictions at the earliest possible date.”
The EWSS represents a substantial and key part of the government response to the current crisis. The EWSS is an important bridge between the Pandemic Unemployment Payment (PUP) and regular employment which is the ultimate goal.
As part of Budget 2022, the government agreed the future of EWSS including its exit arrangements, and the subsequent enhancement of the scheme as announced on 9 December 2021.These measures were legislated for in Finance Bill 2021.
Under these arrangements, businesses that qualified for EWSS as at 31 December 2021 would continue to be supported until 30 April 2022, while the scheme would close to other businesses from 1 January 2022.
Due to further public health restrictions announced on Friday last (17 December), businesses who may have deregistered from the scheme in 2021, as their business activity was at a level where they would have been outside the turnover qualification criteria for eligibility, may return to a position where they need EWSS support in January 2022 and possibly beyond. The changes to EWSS will accommodate such businesses.
Businesses that previously registered for EWSS and received a payment in compliance with the scheme have the opportunity to re-qualify for the scheme where they meet certain conditions. Broadly, the business must experience a 30% reduction in turnover, or customer orders during a particular reference period, as outlined below.
(a) Businesses Established on or before 30 April 2019
To re-qualify for EWSS, the business must anticipate that their combined turnover for December 2021 and January 2022 will be down by at least 30% compared with their combined turnover for December 2019 and January 2020.
(b) Businesses Established between 1 May 2019 and 31 December 2021
To re-qualify for EWSS the business must anticipate that their average monthly turnover for December 2021 and January 2022 will be down by at least 30% compared with the average monthly turnover across the period August 2021 to November 2021 (or on a pro-rata basis if established during this four month period).
The business must also have a valid tax clearance certificate.
Where the business meets the criteria for re-entry for EWSS, such businesses will receive support on a prospective basis for January 2022 onwards, and they can remain in the scheme until its expiry date (30 April 2022).
Businesses that commence operations from 1 January 2022 onwards are not eligible for the scheme.
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 (16 December) indicate that payments of over €5.83 billion and PRSI credit of €913 million have been granted to 51,800 employers in respect of 699,200 employees.
For the month of November (the latest available monthly data), 24,500 employers availed of EWSS in respect of 281,800 employees, receiving subsidy payments of almost €335 million and PRSI credit of €49 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 €1.55 billion since the introduction of the scheme, accounting for the largest share across all sectors at 26.6%. The wholesale and retail trade sector received EWSS payments of over €744 million (12.7% of all payments), followed by the construction sector with EWSS payments of almost €500 million (8.6%).
Based on provisional data for November in terms of the number of employments supported by the EWSS, the largest beneficiary is the accommodation and food services sector (approximately 115,000 employments or 41%), followed by wholesale and retail trade (approximately 25,000 employments or 9%).
Tax Debt Warehousing was announced by Government on 2 May 2020, to provide a vital liquidity support to businesses suffering downturn due to the COVID-19 pandemic. The warehousing arrangements initially applied to VAT and PAYE (employer) liabilities accumulated by businesses associated with the pandemic. Debt warehousing is also available to taxpayers for Income Tax 2019 and Preliminary Income Tax 2020, subject to qualifying criteria. In addition, Debt Warehousing is available on balances that have been overpaid under the Temporary Wage Subsidy Scheme (TWSS) on the same basis as VAT and PAYE (employer).
On 1 June 2021 Government announced that the period where tax liabilities arising can be warehoused was extended to the end 2021 for all eligible taxpayers, with an interest free period during 2022, and 3% interest applying thereafter until the tax debt is repaid, as well as the inclusion of overpayments of the EWSS. Income Tax 2020 and Preliminary Income Tax 2021 was also included.
Over 100,000 individual businesses are availing of Debt Warehousing. As of end-November 2021, €2.95 billion of liabilities were warehoused:
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.