Section 11 of the Finance Bill provides for the introduction of the COVID Restrictions Support Scheme (CRSS). This targeted support scheme was announced on Budget Day for businesses whose trade has been significantly impacted or temporarily closed as a result of public health restrictions. The scheme provides an advance credit for trading expenses over the restriction period, subject to a maximum weekly payment of €5,000. The legislation requires a claimant to demonstrate that members of the public are limited or cannot access the business premises in which their trade is carried on, as a result of COVID-19 restrictions.
Qualification criteria:
The CRSS is available to:
- self-employed persons (sole traders or partnerships) and companies carrying on a trade or trading activities, the profits from which are taxable under Case I of Schedule D, from a business premises located wholly within a geographical region for which COVID restrictions are in place;
who can demonstrate:
- that the turnover of the business, during the period that COVID restrictions are in place, will amount to no more than 25 percent of the average weekly turnover of the business in 2019 (or average weekly turnover in 2020 in the case of a new business) multiplied by the number of weeks that the restrictions are in place;
and:
- is registered for the scheme through ROS;
- completes an electronic claim form on ROS;
- makes a declaration to Revenue that they satisfy the relevant conditions;
- has complied with their VAT obligations;
- is eligible for a tax clearance certificate throughout the COVID restrictions period and any COVID restrictions extension period; and
- but for COVID-19 restrictions, the business would be carried on and it is intended that the business will carry on when the COVID restriction ends in the relevant region.
The legislation defines business premises as a building or other similar fixed physical structure from which the business activity is ordinarily carried on. Where a customer of a trade acquires goods or services through attending more than one business premises, the trade carried on at each business premises is considered separately in determining whether the conditions for the relief are met. Similarly, where more than one trade is carried on, each trade is treated as a separate trade and the turnover of the whole trade is to be apportioned between the separate trades (on a just and reasonable basis) in determining whether the conditions for the relief are met.
COVID restrictions are those provided for in regulations made under sections 5 and 31A of the Health Act 1997, being those in place to prevent or reduce the risk of the transmission of COVID-19 and which restrict certain business activity. The legislation also considers an extension to COVID-19 restrictions within a geographical region beyond the date provided for in regulations made under sections 5 and 31A of the Health Act 1997.
Relief available:
Qualifying taxpayers will be able to make a claim for an amount equal to 10 percent of their average weekly turnover in 2019 up to €20,000 and 5 percent thereafter, for weeks that the COVID restrictions are in place. Businesses established between 26 December 2019 and 12 October 2020, can base their claim on their actual weekly average turnover in the period between the date of commencement and 12 October 2020. The relief represents an advance credit for trading expenses and is subject to a maximum weekly payment of €5,000, for each week that the business is affected by the COVID restrictions.
The average weekly turnover is the average weekly VAT-exclusive turnover for 2019 or between 26 December 2019 and 12 October 2020, depending on when the business was established.
As the relief is provided in the form of an advance credit for trading expenses, the calculation of taxable profits for the current year, and 2021 as necessary, the tax deductible expenses should be reduced by the amount of advance credit for trading expenses received under the scheme. Revenue confirmed that a claim under the scheme will only result in additional tax where the business is in a profitable position for the chargeable period.
Submitting a claim:
Under the draft legislation, a claim under the CRSS must be made no later than 8 weeks from the date that the claim period commences. For the current restrictions, the claim period commenced on 13 October 2020. The ROS facility for registering and making a claim is not yet available.
When registering for the scheme the business is required to provide the particulars considered necessary and appropriate by Revenue, which include the name, address and tax registration or PPS number of the person making the claim. When completing the electronic claim, the business is required to include:
- the average weekly turnover;
- the VAT paid in 2019;
- the VAT-exclusive turnover in 2019; and
- the expected percentage reduction in turnover.
Duration of the scheme:
The scheme will operate from 13 October 2020 to 31 March 2021. There is provision for the Minister for Finance to vary aspects of the scheme by Ministerial Order.
Anti-avoidance:
Section 485 TCA 1997, as to be inserted by Finance Bill 2020 includes details on how claims under the scheme, where it subsequently transpires that a claim was not permitted.
The draft section 485(13) TCA 1997 provides that where such a claim is made by a company and it is not repaid, the company will be charged to tax under Schedule D Case IV for the chargeable period in which the claim commences, on an amount equal to four times the amount that was not permitted to be claimed. No loss, deficit, credit, expense, or allowance can be offset against that amount. It will not form part of the company’s income for the purposes of calculating a surcharge under section 440 TCA 1997.
The draft section 485(14) TCA 1997 provides that where such a claim is made by an individual and it is not repaid, the individual is deemed to have received an amount of income equal to five times the amount that was not permitted to be claimed. This amount, known as the unauthorised amount, will be charged to tax under Schedule D Case IV. No tax deduction, relief or credit will be available to reduce the tax due on this amount.
Interest applies on invalid claims or an incorrect claim from the beginning of the claim period.
The draft section 485(15) TCA 1997, provides for the opportunity to repay Revenue where it is subsequently identified that the relevant requirements were not met or where a claim exceeds the amount a person is entitled to receive.
Publication:
The names and addresses of all businesses who receive payments under the CRSS will be published on the Revenue website.
The draft provisions relating to the CRSS are included in Section 11 of the Finance Bill 2020. Revenue is expected to issue guidance on the operation of the scheme in due course.
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