Revenue extended the deadline from 30 September to 31 October for taxpayers wishing to enter into a phased payment arrangement (PPA) to avail of the reduced interest rate (3 percent) on outstanding ‘non-COVID-19’ tax debts. Chartered Accountants Ireland requested an extension to the deadline in a letter to the Revenue chairman, Niall Cody. As confirmed in a Revenue eBrief, the extended deadline allows for taxpayers and their accountants to finalise a PPA covering non-COVID-19 tax debt in respect of liabilities due by 30 September 2020. Revenue confirmed the extension to the deadline in a press release on Wednesday evening, which noted the challenges that taxpayers and their agents are experiencing at this time. Over €46 million of tax debt is now covered by a PPA to which the reduced interest rate applies. Collector General, Joe Howley …” strongly encouraged the uptake of this opportunity and of the extended deadline that now applies”. Where a PPA is in place, a business will qualify for tax clearance, which may allow access to the EWSS and other schemes. Revenue confirmed to Chartered Accountants Ireland that a reduced interest rate PPA would be available for a 2019 income tax liability, where preliminary tax was underpaid in 2019. As the due date for the full liability reverts to the date the preliminary tax was due (i.e. 31 October 2019) the liability is due before 30 September 2020. Accrued interest at the full rate from 31 October 2019 to the date of the PPA applies in such a scenario. The Revenue information booklet provides detailed information on the reduced interest rate on non-COVID-19 tax debt. 

The TWSS reconciliation process and the requirement to report the subsidy paid amount to Revenue before 31 October 2020 features as our top Irish story this week. Revenue has also provided details on how payments received under the TWSS and PUP will be taxed.  In the UK, was the Chancellor’s Winter Economy Plan a trick or treat, and what’s new with HMRC? While in international tax, the OECD has published a report on BEPS Action 13 Country by Country Reporting.      IrelandTWSS reconciliation process – employers are required to report the actual subsidy paid to employees to Revenue before 31 October 2020; A Revenue press release sets out details on how payments received under the TWSS and PUP will be taxed;UK Was the Chancellor’s Winter Economy Plan a trick or treat? Read more on the tax measures announced last week; What’s new with HMRC? We set out some takeaways from a recent meeting; andInternationalProgress on transparency, the OECD has published a report on the BEPS Action 13 Country by Country Reporting. 

Accountants working in practice have provided an essential public service assisting businesses in accessing Government COVID-19 wage supports and grants. Firms have taken on this extra workload while also dealing with a workflow disruption of up to eight weeks due to the Government public health restrictions, and like other small and medium-size businesses all over the country, many firms have been working with a reduced complement of staff over the summer due to health and safety concerns and childcare constraints.  In addition, accountants tell us of delays in getting access to client premises to carry out essential audit work.  This has all culminated in firms facing a race against the clock this Autumn to get tax returns submitted by the deadlines.  Members in practice from all over the country have been in contact with us in recent weeks telling us of the huge work pressures they face and resourcing constraints in meeting the tax deadlines.  This is a challenge also facing members of our fellow CCAB-I accountancy bodies.   Chartered Accountants Ireland and the CCAB-I have made representations to the Government and to Revenue on the deadline crisis facing accountants.  In the CCAB-I Pre-Budget 2021 submission and Chartered Accountants Ireland publication The Next Financial Year, we have called for a suspension of surcharges over the corporation tax deadline for 23 September and the income tax deadline for 12 November.  These publications were distributed to all TDs and Senators and to the Government.   Chartered Accountants Ireland under the auspices of the CCAB-I has made representations to Revenue through the TALC forum and we set out the issues in advance for Revenue in a letter which was discussed at the Main TALC meeting yesterday. We understand that Revenue are considering the continued availability of the surcharge suspension for Corporation Tax returns.We will update you on this important matter via our website, Tax News and Chartered Accountants eNews.  Deferred launch of CRO customer portalWe represented members concerns with the Companies Registration Office (CRO) on its plans to launch a new CORE customer portal at this difficult time for accountants and companies.  The CRO has acted on our representations and announced the postponement of the implementation of the CORE portal until December 2020 after the key filing periods have passed. We will keep you updated on further developments.The CRO held several webinars on the Digital Transformation programme.  Please see a recording of the webinar and the subsequent Q&A for further information.  Thank you for your invaluable feedback and we will continue to lobby for the suspension of surcharges.  Norah CollenderProfessional Tax Leadernorah.collender@charteredaccountants.ie 

In our top Irish story this week, Revenue confirmed certain proprietary directors can claim the EWSS. Read the Tax and Duty Manual on the Stay and Spend tax credit and about the launch of the registration facility for businesses wishing to participate in the scheme, and why you should register for the EWSS now. In the UK, read the NI Tax Committee’s response to HMRC’s Revised Charter and see the latest Making Tax Digital update for agents.    IrelandRevenue confirmed certain proprietary directors can claim the EWSS from 1 September,The Stay and Spend credit registration facility for service providers opened last week, along with the publishing of a new manual on the scheme;Register now – Revenue are reminding employers and accountants that EWSS registration cannot be backdated,UK HMRC’s revised Charter should focus more on the important role of agents, according to the NI Tax Committee; andThe latest Making Tax Digital and Digital Services updates are available.

 Originally posted on Business Post, 2 August 2020.Increases in VAT usually pass the acid test of tax policy – the extraction of the most amount of money with the least amount of complaint.  Compared to an income tax increase, the general population rarely gripes about increases in VAT rates.  Hiking the standard rate of VAT of 21% to 23% in 2012 generated hardly any noise compared to the introduction of USC and the reduction of allowances and credits the previous year.  So will people really notice the VAT decrease of 23% to 21% in the July Jobs Stimulus? VAT is a truly European tax in that the rules are devised in Brussels and then implemented in EU member countries.  It is Brussels that decides that the maximum rate of VAT cannot exceed 25%. .  European rules tell us that a box of teabags is charged 0% VAT, but a cup of tea in a café is charged 13.5% VAT while a tin of iced tea in the supermarket is charged 23% VAT.  There’s little enough any Irish government can do to tinker with the VAT system, except make marginal rate adjustments. VAT is a major contributor to the Irish Exchequer.  In 2019, over €15 billion was collected in net VAT receipts which is more than one quarter of the total tax receipts for that year, yet it is a notoriously blunt instrument of public policy.  No VAT is charged on the clothes of the children whose parents are on social welfare, but no VAT is charged either on the clothes of the children of high earners.  Maybe that’s why governments avoid using it for public policy purposes unless you include the now defunct 9% rate of VAT for the hospitality sector.    So it was all the more surprising that the July stimulus knocked two percentage points off the main VAT rate.  The cost of this measure is €440 million, which is a little less than 10% of the total value of the package.  This estimate for the cost of this six month VAT reduction period is in line with Revenue estimates for good years.  In a moribund economy the Department of Finance seems to expect a spending spree.  Remember too that the 23% rate only applies to about half of the items or services we buy.  The rest are charged at lower rates or are exempt. Outside of the retail sphere, the education sector and the banking sector pay sizeable amounts because their activities are largely VAT exempt.  These sectors cannot recover the VAT they pay on purchases because they don’t charge VAT on their sales.  In the main VAT is therefore a consumption tax ultimately falling on the consumer.  So will the VAT reduction boost sales of clothing, alcohol, electrical and other household goods and luxury foodstuffs which fall into the 23% VAT category?  It might not, even if businesses pass on the VAT rate reduction to their customers.  Despite suggestions otherwise from some political quarters, Minister for Finance Paschal Donohoe was quite clear that the 2% reduction should be passed on to consumers.  That's not going to make a huge difference for many items because the value of a 2% VAT reduction approximates to about €1.60 for every €100 spent.  It only becomes a different story if you go out to buy a big-ticket item like a car, where the VAT saving could perhaps insure it for a year. There is no law obliging traders to reduce their prices because there has been a reduction in the VAT rate.  As long as they charge the correct amount of VAT at the correct time, they can take whatever margin they wish.  Past history however suggests that small VAT reductions like the current 2% reduction tend not to get passed on to consumers.  Part of the rationale when the 9% rate of VAT on hospitality was introduced was that a full 4.5% reduction to the normal 13.5% rate would be visible and palpable and therefore consumers would expect to see the difference.So even if it is passed on, a 2% VAT reduction may be inadequate to drive additional volumes of consumer spending.  In terms of business benefit it might have been better to apply the projected €440 million cost towards reducing the vast amounts of VAT debt currently being warehoused against the day when businesses can finally pay their tax liabilities.  Given that the EU state aid restraints are temporarily lifted, that €440 million could have been targeted, for example, specifically to forgive some of the historical VAT due from the SME sector.  The July Jobs stimulus was good.  Ministers and their officials alike did well to deliver what in effect is a full scale national budget in the space of few weeks.  The purpose and rationale of many of the measures like the extension of the wage subsidy, the extension of the pandemic unemployment payments, and the extinguishing of commercial rates is readily apparent.  The object of this VAT reduction is not as clear. I've never seen a tax reduction I didn't like.  However, many consumers may not notice this tax reduction and many businesses could benefit more from this element of the jobs stimulus if the cost of the VAT reduction was diverted to reducing their current and not their future tax debts.  Dr Brian Keegan is Director of Public Policy at Chartered Accountants Ireland