Minister for Finance Paschal Donohoe announced the expansion of the tax debt warehousing scheme in yesterday’s Budget. The Collector General’s Division has provided Chartered Accountants Ireland with the following update: I refer to your representations at TALC regarding the section 997A Taxes Consolidation Act 1997 (TCA) issues impacting certain directors / employees who have a “material interest” in the company that pay their emoluments, and who are not entitled to a credit for the tax deducted from their remuneration  under the PAYE system but not remitted to Revenue, as a consequence of their employer company availing of debt warehousing for PAYE (Employer) liabilities.  In yesterday’s Budget publication, the Department of Finance has outlined the intention to allow self-assessed income taxpayers with employment income who have a material interest in their employer company to warehouse income tax liabilities relating to their Schedule E income in these circumstances. Please note this is subject to the enactment of the Finance Bill. In this regard, where a director / employee has a “material interest” in the company that pays their emoluments, and section 997A TCA means the director / employee is not entitled to a credit for the tax deducted due to the company warehousing its PAYE (Employer) liabilities, and the director/employee does not satisfy the 25% reduction of income threshold to avail of income tax debt warehousing, the director / employee may avail of debt warehousing  only for their Schedule E (PAYE) liability which has been warehoused by the employer company. The non Schedule E liability must be paid when filing the income tax return. Revenue has updated the Statement of Net Liabilities screen to include a new tick box declaration (as outlined below). When completing the Statement of Net Liabilities screen, a director / employee who satisfies the above requirements and wishes to warehouse their Schedule E liability only, may tick the relevant declaration to avail of debt warehousing for their Schedule E liability. Although my income has not reduced by 25% when compared to 2019, I wish to warehouse my Schedule E (PAYE) liability in respect of the tax deducted from director emoluments as set out in this return on the basis that I am restricted by Section 997A TCA 1997  from claiming credit for tax deducted from those emoluments as a result of my employer company warehousing their PAYE (Employer) liabilities. We would be grateful if you could bring this to the attention of your members so that they can inform their clients who are impacted by this issue. END OF MESSAGE As highlighted in the CCAB-I’s Pre-Budget Submission, and Chartered Accountants Ireland’s The Next Financial Year, the interaction of anti-tax avoidance provisions under section 997A TCA 1997 and the tax debt warehousing scheme gives rise to financial difficulties for taxpayers classed as proprietary directors and employees with a material interest in their employer company because this cohort of taxpayer are not entitled to a credit for PAYE tax in the calculation of their income tax liability for 2020 and preliminary tax liability for 2021 where their employer is participating in the tax debt warehousing scheme. Chartered Accountants Ireland, under the auspices of the CCAB-I, has made representations to Revenue for a pragmatic solution to this issue.  The Institute has asked Revenue for clarification on a number of issues related to the expanded debt warehousing scheme and further information will be published in Chartered Accountants Ireland’s  Tax News when it becomes available.

Confirmation that the Employment Wage Subsidy Scheme (EWSS) will remain in place in a graduated form until 30 April 2022 will give vital certainty to over 39,000 employers who are still registered for the support, Chartered Accountants Ireland said today. Reacting to Budget 2022, the largest professional accountancy body on the island of Ireland said this support is key to helping the SME sector to return to pre-pandemic trading levels.  Business supports Norah Collender, Professional Tax Leader, Chartered Accountants Ireland said “Today’s decision to extend the EWSS until 30 April 2022, avoiding any cliff edge, will come as a major relief for many small businesses that are still not operating at full capacity, for example in the tourism, hospitality, and entertainment sectors. These supports cannot last forever, but their presence over the last 18 months has been an example of a targeted, partnership-based approach by the state which has kept many businesses afloat.”   In contrast, the Institute referenced the decision to not reduce Ireland’s rate of Capital Gains Tax, among the highest in the EU, from 33 per cent as a missed opportunity, noting the role that a reduced CGT rate could have played in supporting entrepreneurship and encouraging investment in SMEs that need capital. The Institute also noted the announcement by Government that new companies can continue to benefit from a reduction in corporation tax, with companies now able to avail of this for the first five years of trade, an increase on the previous limit of three years. Collender said “The struggle for survival is a reality for start-up companies, and that struggle is even more acute for businesses starting out just as the country recovers from a pandemic and ongoing Brexit disruption. A reduced corporation tax liability for such business will help cash flow and is a worthwhile endorsement of the Irish entrepreneurial spirit.” Carbon reduction measures Ireland’s enterprise sector accounts for just over 13% of the economy’s total emissions. According to the Institute, there was very little in today’s Budget to incentivise those businesses to help achieve the 7 per cent annual emissions reduction that the Government has committed to over the next decade. Commenting, Cróna Clohisey, Public Policy Lead, Chartered Accountants Ireland said “Businesses, particularly SMEs, will play a crucial rule in meeting the Government’s net-zero carbon emissions targets by 2050. However, businesses can only deliver if they are supported by the right policy frameworks and incentivised by Government to commit to carbon-reduction targets.  “The absence in this Budget for example of an enhanced R&D Tax Credit to fast track the development of green technologies making renewable energy cheaper and more readily available, is a real missed opportunity.” This lack of incentive and alternatives for businesses to make a different choice, also applies to consumers, with the Institute noting that the biggest challenge of tackling climate change continues to be changing human behaviour. Clohisey continued “Any positive environmental impact of carbon taxes is limited by the lack of alternatives for consumers. Higher diesel and petrol prices will not have any real impact on car usage or carbon emissions until affordable alternatives are provided to consumers. Electric cars remain expensive and while the extension of the BIK exemption on electric cars out to 2025 is broadly welcome, the grants available to purchase new electrical cars should be extended to second hand electric vehicles.  “Similarly, today’s carbon tax rise is effectively cancelled out by the resulting need to increase the weekly fuel allowance payment. Continuing to increase the fuel allowance without accelerating the retrofitting of homes for those in fuel poverty risks leaving the State in a holding pattern, without forward momentum towards net-zero.”  Supporting home working The pandemic has shone a harsh spotlight on how the taxation system reflects the costs for employees working from home. To date, tax relief can only be claimed on expenses incurred for equipment used “wholly, exclusively and necessarily” in the performance of the duties of employment, with a strict interpretation of this resulting in complex rules and slim odds of making a successful claim. Restrictive tax rules for making claims for costs of utility bills have resulted in a low uptake to date by remote workers. Norah Collender, Professional Tax Leader, Chartered Accountants Ireland said “Fairer and more accessible tax rules must be developed as part of an effective strategy for remote working. The Institute has previously called for a similar measure to the UK’s ’express claim’ tax relief to be considered by the Irish Government; while more modest, it is easier to claim. Today’s increased relief for 30 per cent of electricity, heating and broadband costs will only facilitate the hybrid working model if the tax relief is straightforward for claimants.” ENDS For more information:  Jill Farrelly  PR & Communications Manager   Chartered Accountants Ireland  087 738 6608

With the requirement to work from home soon expiring, employers must be proactive in their approach to the return to the workplace. As restrictions lift and the vaccination rollout continues, planning and preparation are needed to ensure a seamless return, says Dera McLoughlin. With the successful rollout of Ireland’s vaccination programme against COVID-19, many Irish employers and workers are now preparing to return to their physical workplace after a considerable period of working from home. To ensure that the return to work aligns with current Public Health advice and measures to keep workplaces safe, the Tánaiste and Minister for Enterprise, Trade and Employment, Leo Varadkar TD, has published an updated Work Safely Protocol. It will help ensure that employers and workers continue to contain and prevent the spread of COVID-19. While many retail and hospitality sectors returned to work in May 2021 in line with Government advice at the time, a phased return to the office and workplaces for those currently working from home will now take place from 22 October 2021, when the requirement to work from home will be removed. This will allow employees to return to physical attendance in the workplace on a phased and cautious basis appropriate to each sector. Lead worker representative A key component for ensuring adherence to the Protocol is the role of the Lead Worker Representative (LWR) in the workplace. Employers are required to appoint at least one LWR who will work with the employer to assist in implementing and monitoring adherence to the Protocol to prevent the spread of COVID-19 in the workplace. LWRs should be trained appropriately by their employer and be the conduit between workers and the employer for any concerns about the implementation of the Work Safety Protocol. Guidelines within the Work Safely Protocol The Work Safely Protocol sets out comprehensive steps for employers and workers to reduce the risk of exposure to COVID-19 in the workplace, including: Updating the COVID-19 response plan; Implementing and maintaining policies and procedures for prompt identification and isolation of workers who may have symptoms of COVID-19; Developing, updating, consulting, communicating and implementing workplace changes or policies; and Implementing COVID-19 Infection Prevention and Control (IPC) measures. The Protocol also provides guidance on workplace and community settings, occupational health and safety measures, and a library of resources for employers and workers. Considerations for employers Through many workplace surveys carried out in the past year, it is evident that many office-based employees wish to avail of some form of remote work in the future. Many companies also indicate that they want to adapt and accommodate their employees and continue to offer a degree of flexibility. A recent survey from CIPD Ireland outlined that one in two businesses in Ireland plans to adopt remote working in some form permanently in the future. When organisations consider their working arrangements, any decisions made must be based on several factors such as business objectives, employees’ wishes, potential office space adaptations and associated costs. Here are some key considerations. Health and safety requirements Before any employee returns to their workplace, the work environment must be safe and compliant with all relevant Government and HSE guidelines and in line with the Safety, Health and Welfare at Work Act requirements. Companies are advised to create and/or update policies that reflect the environment, health and safety, and emergency protocols to align with HSE guidance. It is also essential that the organisation establishes clear protocols for returning to the building, provides the requisite training on accessing shared workspaces and equipment, and the measures in place if an employee displays symptoms of COVID-19 while in the workplace. The price of returning to work Before returning to the workplace, an organisation must evaluate and understand the costs of bringing people back to the office. There will likely be costs such as reconfiguring office space and seating, increased cleaning costs, and potential PPE costs. Types of work and phasing the return to work Before returning to the workplace, each role and team should be reviewed strategically to identify which roles need to be on-site and which roles use technology or machinery. When determining which teams should be prioritised, an organisation will plan a phased return to ensure maximum productivity. The voice of the employee The difficulties that employees have faced over the past year while remote working cannot be understated. Therefore, before employees return to the workplace, employers must assess and understand employees’ needs, personal situations, welfare, and mental health. Where possible, businesses must understand such employee concerns while ensuring productivity is maintained. Tax Hybrid working is the future, and while employers can provide certain benefits to staff tax-free (e.g. specific office equipment, mobile phone etc.), these are limited. Employers must be conscious of published Revenue guidance on what expenses and benefits the employer can provide tax-free to remote working employees. If the employer inadvertently provides benefits not addressed in Revenue guidance, the benefit would be considered a taxable benefit, resulting in a payroll exposure for both the employer and employee. Employers should look for any potential new measures that may be announced in Budget 2022. Dera McLoughlin is Partner, Head of Consulting at Mazars.