Tax RoI

Minister for Finance, Paschal Donohoe confirmed in a response to Parliamentary questions, on Tuesday 17 June, that Temporary Wage Subsidy Scheme (TWSS) payments will not be clawed back where the employee is subsequently laid off.   While the TWSS was introduced in recognition of the need to protect the relationship between employee and employer, the Minister clarified “maintenance of the employment relationship for a specific period of time is not one of the criteria for eligibility for the TWSS.” Accordingly, no “clawback mechanism” will be implemented to recover TWSS payments made to employers for employees who are subsequently laid off.   Further parliamentary questions on the TWSS related to the payment of bonuses to employees.  The Minister confirmed that “bonuses, commissions and other once off payments” are included in the calculation of Average Revenue Net Weekly Pay (ARNWP) and payments of wages and bonuses above the ARNWP are likely to exceed threshold limits, giving rise to tapering adjustments.   Further details can be found in the written answers to Parliamentary questions at questions 101 and 102.   

Jun 22, 2020
Tax UK

Members can visit our dedicated UK Coronavirus Job Retention Scheme (“CJRS”) page, which provides guidance on the scheme. Download our factsheet on the who, what, where, when and why of the scheme.    Employers can now notify HMRC of any amounts overclaimed under the CJRS and offset the relevant sum against a subsequent claim. HMRC are also working on a system to allow employers to notify HMRC of any overpayments discovered after the employer’s last JRS claim was made. For underclaims of CJRS payments, claimants should call HMRC helpline.  Readers are advised to ensure they are using the latest CJRS, to bookmark the relevant links and print a copy of the guidance which applied at the time a claim for the CJRS grant is made.   The CJRS guidance was also updated again last week as follows:  https://www.gov.uk/guidance/check-which-employees-you-can-put-on-furlough-to-use-the-coronavirus-job-retention-scheme - information added about the exception for military reservists  https://www.gov.uk/guidance/check-if-you-could-be-covered-by-the-coronavirus-job-retention-scheme - information added about the exception for military reservists   https://www.gov.uk/guidance/claim-for-wages-through-the-coronavirus-job-retention-scheme - link added to a new template when claiming for 100+ employees  Readers are also reminded of the changes to the CJRS which will take effect from 1 July 2020.  The key points of change applicable from 1 July are as follows:-  The revised flexible scheme is only available to employers that have made claims under the first version of the scheme for employees furloughed for at least 3 weeks starting on 10 June 2020 at the latest;  The only exception to this at present is for claims for employees returning to work after a period of parental leave or military reservists, who may not have been furloughed previously;  There is a limit to the number of employees who can be claimed for in a single claim – this will be the maximum number claimed in a single claim under the first version of the scheme;  Employers have until 31 July 2020 to make claims for periods up to 30 June 2020;   The flexibility element means furloughed workers can work part-time; there is no longer a minimum furlough period;  Furlough claims will require more detail including the usual hours worked which will be based on calendar days. The hours on furlough will be the claimable amount;  Furlough claims must be for at least a week and will not be able to extend across a month end – this is due to the changes being introduced from 1 July, 1 August, 1 September, and 1 October;  30 November 2020 will be the final date for submitting claims under the flexible rules applicable from 1 July 2020;  Employers must still agree working arrangements with furloughed employees from 1 July onwards - employment law requirements must still be satisfied;  Claims under the flexible scheme will open from 1 July 2020;  Claims will again be made using the online portal; agents will continue to be able to submit claims for clients.

Jun 22, 2020
Tax RoI

The draft Programme for Government was published on Monday 15 June following agreement by Fine Gael, Fianna Fáil and the Green Party party leaders. Taxation highlights focus on supporting the SME sector, job retention and creation, and Foreign Direct Investment (FDI).   With a deficit of €30 billion estimated for the end of the year, the draft Programme for Government enlists taxation measures to close the deficit. However, any tax rises will be based on so called negative externalities such as carbon tax, sugar tax, plastics, etc.    Highlights for the SME sector and small businesses:  The July Stimulus package proposes to introduce a new €2 billion Credit Guarantee Scheme, SURE scheme and the warehousing of tax liabilities.   Assurances that the tax system will remain supportive of the SME sector and a promise to maintain Ireland’s attractiveness for businesses to start and scale up.   A review of Capital Gains tax measures in each Budget over the next five years, with a view to supporting innovation driven enterprise, assisting in the transition to a low carbon economy.   Support for greater up-take of the R&D tax credit by small domestic companies, with a commitment to examine issues with respect to the preapproval procedures and reduce record-keeping requirements.  Job retention and creation highlights include:  The July Stimulus package will consider the future implementation of the Temporary Wage Subsidy (TWS) and the future distribution of the pandemic unemployment payment (PUP).   A Commission on welfare and taxation is to be established to independently consider how the tax and welfare systems can support economic activity and promote increased employment.  Corporation tax measures include:  A commitment to the 12.5% tax rate.  Recognition of taxation as a national competence.  Continued constructive engagement on international tax reform through the OECD.  Continued implementation of the Roadmap on corporate tax reform.  Recognition of the need for taxation to reflect changes in the digital economy, in line with the OECD.  Income tax proposals include:  A commitment to maintain income tax and USC rates, and no changes to income tax credits or bands in Budget 2021.  From Budget 2022 onward, where incomes are rising again, income tax credits and bands will be indexed linked to earnings.  Equalisation of the earned income tax credit and the employee tax credit.  Improvements to the “unfair” 3% self-employed USC charge.  Support of stay-at-home parents through an increase to the home carer tax credit in line with increases to subsidies for childcare.   Other tax proposals within the draft Programme for Government are:  An annual increase in carbon tax of €7.50, until Budget 2029 and an increase of €6.50 in 2030.   Carbon tax receipts will be partially utilised in retrofitting homes and incentivising farmers to farm in a greener, more sustainable way.   An examination of changes to the tax system to encourage the efficient use of resources.  Local Property tax legislation will be brought forward, and new homes will be brought into the tax system.   A targeted tax regime to discourage ‘vaping’ and e-cigarettes.  An examination of the merits towards changing tax arrangements to encourage remote working.  Further consideration of tax measures to manage evolving issues in the dairy sector, such as market volatility.   Ensuring the tax system remains supportive and attractive to film and media production.  

Jun 22, 2020
Tax UK

HMRC has reviewed and updated its guidance at CTM92650 in light of the pandemic. This guidance covers early repayments of corporation tax quarterly instalment payments in response to receipt of a number of claims and requests from taxpayers, agents, and professional bodies.   This means that companies can, in exceptional circumstances, make earlier claims for repayment of their instalment payments for an accounting period. Regulation 6 of the Corporation Tax (Instalment Payment) Regulations (SI 1998/3175) allows for companies to make a claim where, due to a change in circumstances, they believe their liability is likely to be less than previously calculated. A revised calculation of that liability may take into account anticipated losses of the current accounting period that has not yet ended. Companies will need to provide full evidence to support these claims.   The updated guidance provides examples of the supporting evidence that would be required to make a claim. The evidential requirements will depend on the particular facts of the claimant companies.   

Jun 22, 2020
Tax RoI

Senior Revenue officials Anne Dullea and Gearoid Murphy joined Chartered Accountants Ireland in a podcast to talk through eligibility criteria for the TWSS along with common operational issues on running the scheme. (This recording is based on Revenue Guidance as at the date of recording on Wednesday 17 June).  Listen to Tax under the spotlight podcast here. 

Jun 22, 2020
Tax RoI

This week, in Irish stories, take a look at Revenue’s answers to member queries on Temporary Wage Subsidy Scheme issues. In UK developments, the guidance for both the coronavirus job retention scheme and the self-employed income support scheme has again been updated. In International news, the European Commission have released a consultation on the VAT scheme for travel agents and tour operators.     Ireland Take a look at Revenue’s answers to member queries on the TWSS Read Revenue’s recently issued guidance on completing the 2020 Form CT1 UK Updated guidance on the self-employed income support scheme confirms that if a business has been “adversely affected” on or after 14 July 2020 a claim under the scheme can be made in August 2020 The guidance for the coronavirus job retention scheme has again been updated International The European Commission have released a consultation on the VAT scheme for travel agents and tour operators  

Jun 18, 2020
Tax RoI

Members have contacted us for clarification on several Temporary Wage Subsidy Scheme (TWSS) related issues which we put to Revenue.  The issues relate to the Q2 25% reduced turnover test, employer top-up payments, and clarification on how Revenue plan to collect tax on TWSS payments to employees.   Question 1: In terms of the qualification criteria for employers to claim the TWSS, members have clients who claimed the TWSS in good faith on the basis that projected turnover for Q2 was down 25% in comparison to Q2 2019, but are now going to fail the Q2 25% reduced turnover test due to unexpected contract wins. The employer will cease the TWSS claim immediately, but what is their position in terms of the TWSS payments received up to the date they won the contract, which pushed the turnover over the Q2 25% reduced turnover test?    Revenue’s response: It is not intended to reclaim TWSS in circumstances where it was genuinely claimed in the expectation that the projected turnover for Q2 25% test would be met. However, employers will need to provide evidence supporting the initial claim, the date of change in circumstances, and display that claims to TWSS ceased as soon as they became aware they would not qualify.  Question 2: Are there any plans to allow employers to pay top-up payments exceeding the ARNWP less the subsidy? Employees are unhappy to be getting payments less than their take home pay pre-Covid-19 and this is causing a lot of difficulties for employers who need the full TWSS without triggering a tapering adjustment  Revenue’s response: There are currently no plans to alter the rules of the scheme. The issue of employees being paid less than their legal entitlement to avoid tapering is an employment law issue rather than a taxation matter.    Question 3: Can Revenue provide guidance on how it plans to collect tax on the TWSS payments to employees. This could come to a substantial sum if an employer claims the TWSS until the end of the scheme in August. For example, if an employee gets €350 per week for 22 weeks, this will amount to €7,700 in untaxed income for 2020. Revenue have indicated that the employee’s tax position will be reviewed at the end of 2020 and no upfront tax payment will be required from the employee, but the tax due will be collected by reducing tax credits and rate bands in 2021. Clarification on how this tax will be collected would be useful now, along with confirmation that the tax liability will be collected over at least four years so that the employee is not subject to undue hardship, as a result of the employer claiming this subsidy.  Revenue’s response: Generally speaking, most income is liable to tax, and the amount of tax an individual pays depends on the amount of the income they earn, on their personal circumstances and the tax credits they are entitled to.  TWSS payments are liable to income tax and USC, however, the subsidy is not taxable in real-time through the PAYE system during the period of the subsidy scheme. Instead, the employee will be liable for tax on the subsidy amount paid to them by their employer at the end of the year when Revenue automatically reviews their tax position.  When an end of the year review takes place for a PAYE taxpayer, it may be the case that they have unused tax credits that will cover any tax owing that may arise. Where a PAYE taxpayer owes tax, it is normal Revenue practice to collect any tax owing in manageable amounts by reducing tax credits for a future year or years in order to minimise any hardship. Additionally, if an individual has any additional tax credits to claim, for example health expenses, this will also reduce any tax that may be owing. Question 4: As a general comment, members say that there is confusion among the public on who the TWSS is intended to support with many employees missing the point that the TWSS is there to support employers. While this message is clear from Revenue guidance aimed at tax professionals i.e. FAQs, could this point be considered in Government communications to the public and information sources aimed at employees.  Revenue’s response: We will bring this to the next cross Government communication group meeting. Question 5: An employer qualifies for the TWSS as turnover fell by 25% in Q2. Looking ahead to Q3, turnover will recover so the 25% test will not be fulfilled. However, the employer is still in financial difficulty due to the cumulative impact of the drop in turnover in Q2. Can the employer continue to claim the TWSS in Q3 (July & Aug)? If yes, what information should be in place to support the claim? Revenue’s response: The eligibility criteria turnover test is remaining the same i.e. a 25% drop between 14 March and 30 June. So quarter 3 turnover is not a measure. However, where cash reserves recover to levels above that required to service debt, we would expect to see a significant contribution toward employees wages as set out in the guidelines on employer eligibility.

Jun 15, 2020
Tax International

The European Commission are conducting a public consultation on the VAT scheme for travel agents and tour operators.  The Commission are interested in hearing from travel agents and tour operators, VAT practitioners and travellers.  The Commission wishes to assess whether the special VAT scheme for travel agents and tour operators is still effective and the extent to which existing rules are still relevant and aligned with stakeholders' needs.  The consultation takes the form of a set questionnaire and the closing date for feedback is 14 September 2020. Full details are available on the European Commission’s website.  

Jun 15, 2020
Tax RoI

Revenue have updated their Instruction Manual on End-Use Procedure.    End-use is a Customs procedure whereby goods entered for free circulation into the European Union (EU) may be given favourable tariff treatment at a reduced or zero rate of duty on condition they are put to a prescribed use. This procedure is designed to facilitate trade and ease of movement goods within the EU. The Instruction Manual on End-Use Procedure has been updated as follows:    References to SAD (Single Administrative Document) are changed to Import Declaration, in line with the Union Custom Code (UCC).  New material, explaining Transfer of Rights and Obligations (TORO) have been included. TORO allows the holder of the authorisation for end-use transfer goods to another operator, for them to put to their end-use. The holder of the authorisation for end-use must apply for TORO for any operators they wish to transfer goods to, in advance of any transfer. Further details on TORO and how to apply for the TORO are included in section 7.1 and appendix II – TORO form, of the manual.   Reference to aircraft removed, as aircraft no longer requires end-use authorisation.  Updates to material on the online application procedure. End-use applications for traders can be completed in the Trader Portal. Further details on application procedures are included in section 2.1 of the manual.   Sections 10.1.1 and 10.1.2 are deleted, as no longer required.   Appendix on control officer’s report and conditions removed, as control officers will receive these with applications.  

Jun 15, 2020
Tax RoI

Revenue have updated their guidance for certain non-resident traders providing remote betting services to persons in the state.   The Bookmakers Licence Compliance Procedures Manual has been updated at section 1.5.  Traders required to registering for Betting Duty/Betting Intermediary Duty should complete a Form TR (BET) and submit it by post for processing with Revenue’s Large Corporates Division.  

Jun 15, 2020
Tax UK

Members can visit our dedicated UK Coronavirus Job Retention Scheme (“CJRS”) page, which provides guidance on the scheme. Download our factsheet on the who, what, where, when and why of the scheme.   Readers are advised to ensure they are using the latest CJRS, to bookmark the relevant links and print a copy of the guidance which applied at the time a claim for the CJRS grant is made. HM Treasury has now announced that people on paternity and maternity leave who return to work in the coming months will be eligible for the job retention scheme. The CJRS guidance was also updated again last week. What the new online guidance covers The guidance includes: changes to the scheme and key dates that you need to be aware of; how you can claim if you bring previously furloughed employees back to work part-time from 1‌‌ July (known as flexible furloughing) and how many employees you can claim for in any one claim; how to claim, and the information you’ll need to do so; how to work out how much you can claim, including an online calculator to help you; and more information on amending your claim. What you need to do now read the guidance to see how changes to the scheme impact you, using the calculator to understand how much you’ll be able to claim; book a webinar via GOV‌‌.UK if you’d like more support; and consider which employees you want to keep on full-time furlough and which employees will come back to work – on what hours – to agree arrangements with them as needed for your business. What you need to do from July start your flexible furloughing of employees from 1‌‌ July onwards. You can decide the hours and shift patterns they work to suit the needs of your business – you’ll pay their wages for the time they’re in work and can apply for a job retention scheme grant to cover any of their usual hours they are still furloughed for. You can still keep employees on full furlough if you need to; claim for periods ending on or before 30‌‌ June, by 31‌‌ J‌ul‌y – this is the last date you can make those claims; and claim for further furlough periods as needed – the first time you will be able to make a claim for days in July will be 1‌‌ July.

Jun 15, 2020
Tax RoI

Revenue recently issued guidance on completing the 2020 Form CT1, along with updates to general guidance for the completion of corporation tax returns. The corporation tax return for accounting periods ending in 2020 issued on 4 April 2020.  The following panels have been updated in the 2020 Form CT1:  company details,   trading results,  extracts from accounts,  Irish investment and other income,   capital gains,   research and development credit, and   dividend withholding tax.   Updates included in the 2020 Form CT1 are summarised in Manual 38-02-01E. The manual on completing corporation tax returns (Manual 38-02-01) now contains general information on how to access help in completing the ROS Form CT1.  

Jun 15, 2020