In last months edition we updated you on the EWSS, which is the new employment subsidy available to struggling businesses. Revenue have subsequently updated the guidance to comment on 2 aspects of the scheme.

• Proprietary Directors
• Sweep back for July/August new hires

Proprietary Directors

Directors who own the business will continue to qualify for the scheme. However in order qualify the company must themselves qualify for the scheme and also the directors must have been on the payroll of the company at any time between June 2019 and July 2020. Where a person is a director of more than one company then they will only qualify for the EWSS for one company only.

July/August Sweepback

Employers can now make their submissions for new employees who were hired in July and August and didn’t qualify for the original wage subsidy scheme. These new hires can claim the EWSS for July and August from the 15^th of September. In order to make the claim employers need to first be registered for the EWSS and then complete the following template – https://revenue.ie/en/corporate/communications/documents/ewss-july-august-sweepback.csv

They then need to download this file with Revenue before the 14^th of October

Please see the link to the original article here.

Regards 

Dave

In July we published an article on warehousing Revenue debt. Subsequently Revenue have issued updated guidance on this. Revenues packages can be split simply into 2:

• Covid Related Debt
• Non Covid Related Debt

Covid Related Debt

Businesses are allowed to warehouse VAT and PAYE liabilities for the period where trade is restricted due to Covid and for two months after returning to normal trading. For most companies restricted trading will cease by 30 June, therefore the debt warehousing will cease for most by the end of August. If you are looking to extend the debt warehousing beyond 31 August it is essential you engage with Revenue.

It is important that companies have filed returns for the periods being warehoused as if they don’t Revenue may not grant the warehousing. Warehousing is automatic for businesses whose turnover is less than €3m. For businesses with a turnover of over €3m they need to formally request the warehousing. If your business has not contacted Revenue with regard to this you should do so straight away.

The debt will be warehoused for 12 months after the cessation of the debt warehousing period. For most, the 12 months will cease on 31 August 2021. No interest will be charged on this debt if paid within the 12 months. If entering into an instalment arrangement after the 12-month period ends then a lower interest rate of 3% will be charged.

Non Covid Related Debt

This is any debt you may have had with Revenue pre-March 2020 and also any 2019 liabilities, be they income tax or Corporation tax where returns are now being filed.

Revenue here are allowing a 3% interest charge where one enters into a payment plan with Revenue before 30 September 2020. Note that the 3% rate applies to interest charged from the date of entering into the plan. Any interest pre the date of entering into the payment plan will still be charged at the 8%-10% rates. The 3% rate can only apply to declared liabilities with Revenue.

Revenue has given no indication as to whether they will extend this 30 September deadline. Agreeing a settlement with Revenue and a payment plan with the Collector General is time consuming and cannot done overnight so some extension to this timeframe would be most welcome.

If you are already in an existing payment plan with Revenue then the 3% interest rate will automatically apply to the balance of the debt that was outstanding as at 1 August 2020.

The 'Restart Grant Plus' scheme and the updated Enterprise Support Grant are two recent measures announced by the government to assist businesses reopen and get back trading.

The initial Restart Grant scheme offered grants of between €2,000 and €10,000 based on the rates of the business for 2019 excluding any rates arrears from prior years. The updated Restart Grant Plus scheme has increased the grant assistance to a minimum of €4,000 and maximum of €25,000.

A business can avail of the Restart Grant Plus scheme even if it got funding in the initial scheme up to a combined maximum of €25,000. If the business received less than the new minimum of €4,000 in the first tranche, then they are entitled to a further €4,000 funding under the new scheme.

The rates for 2019 do not actually have to be paid to be eligible to apply. The grant amount is based on the 2019 rates valuation document received by the business subject to the €25,000 limit.

To apply for the Restart Grant Plus the business must have turnover of less than €100,000 per employee, have no more than 250 employees and turnover must have reduced by at least 25% due to the Covid pandemic.

There are several changes to the restart plus scheme from the initial restart grant;

• The turnover threshold of applicants is increased to €25 million from €5 million incorporating the cap of €100,000 per employee
• Commercial Sports businesses and trading charity shops in rated premises can now apply
• Businesses in the hospitality sector like restaurants, pubs and tourist attractions such as museums and galleries are eligible to apply if operating from a rateable premises
• B&B’s which do not pay rates can apply to Failte Ireland for the minimum amount of €4,000
• Multinational companies and large chains of companies like group hotels and betting shops are excluded from the scheme. A franchise however is eligible if completely independent from the franchisor

The thrust of the scheme is based on businesses committing to reopening and retaining employees who are on the Temporary Wage Subsidy Scheme (TWSS). Applications for the grant are made through your Local Authority website and payment should be processed within two weeks into the bank account which makes the rates payments. Applications for the scheme are open until 30^th September 2020.

In addition to the Restart Plus Grant the Enterprise Support Grant is aimed at Sole Traders who do not pay commercial rates and therefore do not qualify for the Restart Grant. The grant which is based on vouched expenses is worth up to €1,000 and is intended to help with the cost of essential equipment to run the business. Business consumables directly related to trading will generally not be accepted.

Eligible costs must relate to the restart of the business and include;

• Capital costs including signage and PPE
• Installation of safety measures
• Business training and coaching
• Advertising and Salaries
• Vehicle running costs
• Accountancy and professional fees
• Public Liability and indemnity insurance

Receipts and invoices must be retained for a period of 12 months following payment of the grant for possible verification checks from revenue.

To qualify for the Enterprise Support Grant the following criteria apply;

• The business was in operation prior to March 2020, closed as a result of the pandemic and has since reopened
• The individual was in receipt of the Covid 19 PUP or Jobseeker’s Benefit/Allowance and has closed the claim since 18^th May 2020
• The business employs fewer than 10 people
• Annual turnover must be less than €1 million
• The individual has a Tax Clearance Access Number (TCAN)

To apply for the grant a form Covid-19 ESG1 must be completed and sent to your local Intreo Centre. The grant will be paid to the same bank account that the Covid-19 PUP or Jobseeker’s claim was paid. The grant is not available if you pay commercial rates or are eligible for any other Covid-19 business restart grants. It appears that a director of a small company will be eligible to apply for this grant if all other criteria are satisfied.

Regards

Sean

Despite the challenges of the last number of months we are happy to say that we have continued to assist people resolve their debt worries through the Personal Insolvency legislation as well as in direct negotiations with Vulture Funds to reach settlements of unsustainable debts.

A lot of the time we can deal directly with the relevant bank but in some cases for a variety of reasons the debtors need the assistance of the personal insolvency legislation to resolve their case.

We have set out a summary of a case we resolved through a PIA application this month. For confidentiality purposes we have not included any names of individuals or creditors and we have changed the figures involved to protect all parties to the arrangement.

Successful Personal Insolvency Arrangement (PIA)   

This is a brief summary of a recent PIA which we were delighted to see was approved by the majority of creditors last week.

One part of legislation that was used in this case was a high court appeal case which is referenced as the ‘Deserted Spouse’. In that case the spouse/co-borrower had left the family home and the remaining person was left to shoulder the burden and try to meet the joint debts that they had borrowed.

As can be seen from the below workings in this case her income was not sufficient to meet these repayments and all of these loans fell into arrears. Two of the creditors pursued her and applied judgement mortgages on the family home, which was in significant negative equity following the property crash in the last recession.

In addition, the debtor was now a single parent of a 12-year-old and her financial circumstances after the separation from her husband were very difficult. The debtor sought our help as she found herself unable to meet her financial commitments as they fell due. Also, the stress of the constant phone calls, letters, legal proceedings and emails from her creditors began to impact on her health and the mental health of her child.

The financial position before the PIA was as follows:

As detailed above the assets did not cover the debts, and the income was not sufficient to meet all the monthly repayments and allow for the reasonable living expenses of the household. RLE’s are set by the Insolvency Service of Ireland (ISI) and they would be considered as being 30% to 40% below the cost of a normal standard of living. The RLE’s would only be applicable for the period of the PIA which is 6 years.

The current PPR mortgage was in arrears by €45,000 and the loan had been sold from one of the main banks to a Vulture Fund and they had issued legal proceedings for the repossession of the family home. The fund had instigated the court repossession as they did not feel that there was any solution available that they could offer to resolve the debt other than the borrower leaving their family home by voluntarily surrendering the property.

The financial circumstances were analysed under the current Personal Insolvency Legislation to decide which of the available solutions best fitted the situation.

• PIA Personal Insolvency Arrangement – This is an assessment over a 6-year term to project the dividend that would be available to the unsecured debtors as per the payment plan below and what would be required to restructure the Secured Debts: 
• PPR – The mortgage debt was reduced to the value of the family home of € 200,000 which was affordable. The tracker interest rate is to be retained at 1.15% and the term to be extended by 5 years until the debtor is 68 years of age. The monthly mortgage repayments will decrease from € 1,255 p/m to €836 per month.
• Judgement Secured Debt – As there was no equity in the family home these debts were treated as unsecured debts as part of the arrangement
• Unsecured Debt – All the remaining debts were treated as unsecured in the PIA. Based on a reduction in the PPR loan to € 836 p/m, this allowed for a dividend payment towards the Unsecured Debt of €308 per month, which is for a term of 6 years. Once this dividend has been paid to creditors at the end of year 6 the balance of the unsecured debts that remain will be written off. This will be a 95% reduction in the unsecured debts.
• At the end of Year 6 the debtor is solvent and the only debt remaining would be the new contracted PPR loan which is affordable now and into the future.

The final proposal was taken to a vote at a creditors meeting and it was approved with 100% of the votes. 

This PIA will allow our client to remain in the family home, allow for the reasonable living costs for her and her child, and after the 72 months she will be clear of the old debts and she will be able to continue her life with a sustainable mortgage.

Mortgage to Rent Cases PIA Approved

We are happy to announce that we also assisted two other couples use the Mortgage to Rent (MTR) scheme to resolve their home loan mortgage in a PIA. This will allow them to remain in their family home for the remainder of their lives. I would point out that the MTR structure is only suitable in a strict certain criterion, so it is important to seek the correct advice before you consider this option.

Please contact me on the details below if you have any banking or insolvency questions or concerns.

Regards

Mark Ryan, CPA,

Personal Insolvency Practitioner (PIP),

Director, Quintas

Email: mark.ryan@quintas.ie

Mark Ryan is authorised by the Insolvency Service of Ireland to carry on practice as a personal insolvency practitioner.

Dave leads the tax advisory division in Quintas and with his team advises on all areas of tax and specialises in corporate restructuring, investment and pension structuring, mergers and acquisitions and succession planning for owner managed businesses.

Dave is also a member of an EU VAT group which provides EU wide VAT advice to companies doing business in Ireland and within the EU.

Tim McCarthy Managing Partner commented: “Dave has played a hugely influential role in the firm’s success to date and we are looking forward to Dave playing a key role in the firms future road map”.

For all your tax enquiries please contact:

Dave O’Brien Tax Partner
T: 021 4641400 M: 086 0490717
Email: dave.obrien@quintas.ie

Under the new July stimulus package issued by the Government to provide aid to businesses during this current pandemic, there have been changes made in relation to the standard rate of VAT.

From 1^st September 2020, the standard rate of VAT has been reduced from 23% to 21% for 6 months ending on the 28^th February 2021 for all businesses.

The government have made the decision to allow the retailer decide as to whether they will pass this VAT cut onto their customers. The VAT rate of 21% still needs to be charged on all sales but it is your decision as to whether you reduce the gross and pass the benefit onto your customers or whether the gross remains the same as per pre 1^st September 2020 and the company uses this reduction to support the additional operating and staff costs caused by the Covid pandemic.

Please ensure any invoices/till receipts issued by the company dated from the 1^st of September 2020 have the new VAT rate applied, unless an invoice is being issued for money received prior to 1^st September 2020 in which case, the respective VAT rate would be 23%.

We suggest a new VAT code to be added to your accounts package for this new reduced VAT rate of 21% for both sales and purchases (Resale & Non-resale) to make the changeover more efficient and less cause for errors. Please note that in previous years 21% was the standard VAT rate so you may have these codes already set up on your accounts package.

Also, please be aware that if you prepare your VAT return on a cash receipts basis, it is important to note that if an invoice was issued pre 1^st September 2020 but it was paid post 1^st September 2020, you need to apply 23% in your VAT return as this was the respective rate at which the date the invoice was billed.

Regards

Nicola

As announced in the July Stimulus Package, from 1 October 2020, patrons will be allowed to claim back 20% of all receipts over €25 spent in bars, restaurants and hotels (other than on alcohol) – subject to a maximum refund of €125 per person. This will be done through the Revenue Receipts Tracker App.

However, to allow patrons to claim the 20% refund in your hotel/bar/restaurant, you will first have to register your business for the scheme with Revenue. This can be done through ROS in the “Stay & Spend – Service Provider Registration” section or alternatively, if you would like your Quintas representative to apply for this on your behalf, please contact the relevant person. Given that the scheme is due to live on 1 October, you should apply for this now to allow time for the application to be processed.

Once your business is registered for the scheme you should be listed as a Registered Service provider here:

https://www.ros.ie/stay-spend-web/rev/search

Regards

Kevin