Coronavirus - Covid Restrictions Support Scheme - Ireland

• Ireland

• Coronavirus - Tax issues
• Tax planning and consultancy

25-01-2021

Overview

As part of Budget 2021, the Minister for Finance Pascal Donohoe T.D. (the “Minister”) announced the introduction of the Covid Restrictions Support Scheme (“CRSS”), a measure aimed at supporting businesses subject to significant Covid-19 restrictions.  The stated intention is for the CRSS to be in addition to the supports currently provided to employers under the Employment Wage Subsidy Scheme.

Set out below is a high-level outline of how the CRSS currently operates based on the most recent guidance issued by Irish Revenue.

Key Highlights

• The CRSS is be available to both companies and self-employed individuals operating a business which is carrying on a trade, and will run from 13 October 2020 to 31 March 2021 (with scope to extend the scheme until 31 December 2021 at the latest).

• Generally speaking, in order to qualify for the CRSS, a business must be subject to restrictions under Levels 3, 4 or 5 of the Irish Government’s Resilience and Recovery 2020-2021: Plan for Living with Covid-19 such that the business is required to prohibit or considerably restrict the public from accessing its premises (the “Claim Period”). However, in certain cases, businesses may be able to avail of the CRSS where lower levels of Covid-19 restrictions apply.

• In addition, VAT-exclusive turnover for the claim period must be no more than 25% of the average weekly turnover in 2019 (or average weekly turnover in 2020 in the case of new businesses) where the business has been required to temporarily shut its premises or operate at significantly reduced levels in order for the business to be eligible for the CRSS.

• Where the taxpayer operates from separate business premises, these will be treated as separate activities for the purposes of the CRSS.

• Additional conditions to avail of the scheme include the requirement for the taxpayer to continue submitting timely tax returns, comply with his/hers/its VAT obligations, hold a current tax clearance certificate and have an intention to resume business once the relevant Covid-19 restrictions are lifted.

• Relief under the CRSS will operate as a cash payment to the business equal to 10% of the average weekly value of the business’ 2019 turnover up to €20,000 and 5% thereafter, subject to a weekly payment of €5,000. The scheme will operate for each week that the business is affected by the Covid-19 restrictions.

• Payments under the CRSS will constitute an ‘Advanced Credit for Trading Expenses’ which will reduce deductible trading expenses when computing the trading profits and gains of the business. This may result in additional tax where the business earns a profit in the relevant chargeable period.

• Where Covid-19 restrictions for a geographical area are extended, a new claim will be required for each extension period.

• Businesses that have qualified for the CRSS in respect of a period of restrictions are eligible to claim an additional ‘restart week’ of support where the business is recommenced on the lifting of Covid-19 restrictions. Businesses must have been subject to such restrictions for at least three weeks, and the relevant business activity must be recommenced within a reasonable period of the lifting of restrictions.

• On 4 December 2020, the Minister announced additional seasonable support for businesses that could not reopen during the Christmas/New Year period. Those businesses are eligible to receive double the amount of the CRSS support payment due for the weeks commencing 21 December 2020, 28 December 2020 and 4 January 2021. For businesses who became eligible for the CRSS after Level 5 restrictions were introduced on 31 December 2020, they will receive a double payment in respect of a claim for the weeks commencing 28 December 2020 and 4 January 2021.

• Any business in receipt of the CRSS will be published on the Irish Revenue website.

Next Steps

• The CRSS will operate on a self-assessment basis. Qualifying taxpayers should register for the scheme via the Revenue Online Service (“ROS”). In the case of a partnership, the precedent partner is the qualifying taxpayer.

• Once registered, the business will need to complete and submit a claim form via ROS, together with certain details (such average weekly turnover in 2019 and the relevant claim period, and the percentage reduction in business turnover), as well as a declaration that the conditions of the CRSS are satisfied.

• A claim may be made through ROS as early as the beginning of the Claim Period and no later than eight weeks from the date on which the Claim Period commences. The eight-week time limit applies from the first day of a Claim Period, which in most cases will be the first day on which the Covid-19 restrictions apply to the business.

• Additional guidelines from Irish Revenue in relation to the registration process and practical operation of the CRSS are available here.

For further information, please contact:

Alan Connell, Managing Partner and Head of Tax - AlanConnell@eversheds-sutherland.ie

Tim Kiely, Partner – Tax and Commercial – TimKiely@eversheds-sutherland.ie

Melissa Daly, Senior Associate – Tax and Commercial – MelissaDaly@eversheds-sutherland.ie

Robert Dever, Senior Associate – Tax and Commercial - RobertDever@eversheds-sutherland.ie

Niall Pilkington, Solicitor – Tax and Commercial – NiallPilkington@eversheds-sutherland.ie

Aoife Noone, Solicitor – Tax and Commercial – AoifeNoone@eversheds-sutherland.ie