Revenue Note for Guidance

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Revenue Note for Guidance

485 Covid Restrictions Support Scheme

Summary

This section outlines the detail of the Covid Restrictions Support Scheme.

Details

Definitions

“applicable business restrictions provision” is to be construed in the manner provided for in the definition of “Covid restrictions period”.

(1) “business activity” is a trade carried on solely or in partnership and means either:

  • the activities of the trade, where customers attend one business premises, or
  • the activities of the trade relevant to each business premises, where customers attend multiple business premises.

In circumstances where customers of the trade acquire goods or services in a manner other than by attending the business premises (e.g. by online or other means), the portion of the trade which relates to transactions effected in that other manner shall be treated as relating to the business premises. Where there is more than one business premises, the portion of the trade which relates to transactions effected in that other manner shall be treated as relating to the multiple business premises and apportioned between each premises on a just and reasonable basis.

“business premises” is the building or a similar fixed physical structure from which the business activity is ordinarily carried on.

“chargeable period” has the same meaning as it has in section 321(2).

“claim period” means a “Covid restrictions period” or a “Covid restrictions extension period”, as the context requires.

“Covid-19” has the same meaning as it has in the Emergency Measures in the Public Interest (Covid-19) Act 2020.

“Covid restrictions” means the restrictions imposed by Government provided for in regulations under section 5 and 31A of the Health Act 1947 (No. 28 of 1947) which have the effect of restricting the conduct of certain business activity during the specified period.

“Covid restrictions extension period” has the meaning assigned to it in subsection (2).

“Covid restrictions period” means the period for which a person who carries on a relevant business activity is required by the provisions of Covid restrictions to prohibit, or significantly restrict, members of the public from having access to the business premises in which the relevant business activity is carried on, which provisions are referred to in the section as “applicable business restrictions provisions”. The period commences on the Covid restrictions period commencement date and ends on the Covid restrictions period end date.

“Covid restrictions period commencement date” means the later of—

  1. 13 October 2020, or
  2. the day on which applicable business restrictions provisions come into operation (not having been in operation on the day immediately preceding that day).

“Covid restrictions period end date” means the earlier of—

  1. the day which is three weeks after the Covid restrictions period commencement date,
  2. the day that is specified in the Covid restrictions (being those restrictions in the terms as they stood on the Covid restrictions period commencement date) to be the day on which the applicable business restrictions provisions shall expire,
  3. the day preceding the first day following the Covid restrictions period commencement date, on which the applicable business restrictions cease to be in operation, or,
  4. the date on which the specified period shall expire.

“partnership trade” has the same meaning as in section 1007.

“precedent partner” has the same meaning as in section 1007 as it relates to a partnership and a partnership trade.

“relevant business activity” has the meaning assigned to it in subsection (4).

“relevant geographic region” means a geographic location for which Covid restrictions are in operation.

“specified period” means the period commencing on 14 October and ending on 31 January 2022,

“tax” means income tax or corporation tax.

“trade” means a trade any profits or gains arising from which is chargeable to tax under Case I of Schedule D.

Covid Restrictions Extension Period

(2)(a) When applicable business restrictions provisions continue to apply to a relevant business activity on the day after the end of a Covid restrictions period, the period for which those restrictions continue to apply is referred to as a “Covid restrictions extension period”. This period commences on the day after the end of a Covid restrictions period, referred to in this section as a “Covid restrictions extension period commencement date” and ends on the Covid restrictions extension period end date.

(2)(b) The “covid restrictions extension period end date” is the date the covid restrictions extension period is due to expire, or if earlier, the day it ceases to be in operation, but in all cases no longer than 3 weeks from the covid restrictions extension period commencement date, and no later than 31 March 2021.

(2)(c) When applicable business restrictions provisions continue to apply to a relevant business activity on the day after the end of a Covid restrictions extension period, the period for which those restrictions continue to apply is also referred to as a “Covid restrictions extension period”. This period commences on the day after the end of a Covid restrictions extension period and ends on the Covid restrictions extension period end date.

Modifications to the Covid Restrictions Support Scheme

(3) If an order is made in respect of section 484(2)(a) the provisions of this section shall be construed and operate subject to the modification in force, a modifications shall be made in respect of the following:

  1. the definition of Covid restrictions
  2. the definition of the specified period
  3. the 25 per cent amount as referred to in subsection (4)(b)(i)
  4. the 10 per cent amount as referred to in subsections (7)(a)(i)(I) or (ii)(I)
  5. the 5 per cent amount as referred to in subsections (7)(a)(i)(II) or (ii)(II), and
  6. the election referred to in section 484(8)(b)

Establishing turnover for the purposes of making a claim

(4)(a) Certain key terms regarding making a claim under the scheme are defined as follows

“average weekly turnover from the established relevant business activity” means the average weekly turnover of the person carrying out an established business activity in the period 1 January 2019 to 31 December 2019.

“average weekly turnover from the new relevant business activity” means the average weekly turnover of a person carrying out a new relevant business activity in the period from the date of commencement of the business activity to 12 October 2020.

“established relevant business activity” means a business activity commenced before 26 December 2019.

“new relevant business activity” means a business activity commenced on or after 26 December 2019 and before 13 October 2020.

New businesses are specifically defined given that they do not have comparable 2019 turnover and therefore for the purposes of establishing a reduction in turnover, the comparable period will be based on their turnover in the period from the date they commenced to 13 October 2020.

“relevant business activity” means a business activity carried on by a person in a business premises wholly located in a geographical location for which Covid restrictions are in operation.

“relevant turnover amount” is an amount as calculated by multiplying the average weekly turnover of the relevant business activity by the total number of full weeks in the claim period.

For established businesses, the amount is determined by the formula

A x B

Where -

A is the average weekly turnover from the established relevant business activity, and

B is the total number of full weeks in the claim period.

For new businesses the amount is determined by the formula

A x B

where

A is the average weekly turnover from the new relevant business activity, and

B is the total number of full weeks that comprise the claim period.

(4)(b) In order to make a claim under the scheme, a claimant must, in addition to satisfying the conditions under subsection (5) and (6), carry on a relevant business activity and demonstrate that during the claim period their business activity was temporarily suspended or disrupted directly as a result of imposed Covid restrictions. The claimant must further demonstrate that the temporary suspension or disruption of the business activity was a direct result of members of the public being completely prohibited or significantly restricted from accessing the business premises from which the business activity operates, and as a result, the turnover of the claimant from their relevant business activity for the claim period is an amount that is 25 per cent (or less) of the relevant turnover amount, as defined.

Claimants must follow guidance issued by the Revenue Commissioners and must demonstrate their eligibility requirements to the satisfaction of the Revenue Commissioners.

All claimants must satisfy the further criteria as laid out in subsection (5).

Any person who meets the criteria required to make a claim under this scheme is referred to as a qualifying person throughout the remainder of the section.

Conditions to be satisfied in order to make a claim

(5)(a) The following conditions must be satisfied in order to make a claim:

A person must register on the ROS system for the scheme and provide all items of information as required by the Revenue Commissioners at the registration stage including those specified in subsection (14).

(5)(b) In making a claim, a person must submit an electronic claim form on the ROS system for a specified claim period. A person must provide all items of information as required by the Revenue Commissioners at the claim stage including those specified in subsection (14).

(5)(c) Claimants must make a declaration on ROS, at the claim stage, that for the claim period they satisfy all required conditions of the scheme and that they are a qualifying person for the claim period.

(5)(d) A person must be in compliance with all Value Added Tax obligations that may apply to it inclusive of registration and furnishing of returns.

(5)(e) A person must be eligible for a tax clearance certificate to be issued to them, in accordance with section 1095, for the duration of the claim period.

(5)(f) Claimants must be persons who would be carrying on a business activity but for the Covid restrictions imposed and who intend to continue to do so once the restrictions are lifted.

Apportionment of turnover where the relevant business activity is part of trade only

(6) Where the relevant business activity of a qualifying person does not constitute a whole trade carried on by that person (i.e. not all of the trade is carried on from a single business premises), for the purposes of determining whether the turnover requirement is met in relation to the relevant business activity (being the trading activities carried on from the business premises concerned), the turnover of the entire trade must be apportioned, on a just and reasonable basis, between the relevant business activity and the other part of the trade. In such instances the relevant business activity is to be treated as a separate trade and the amount of the turnover to be attributed to the separate trade during the claim period is to be determined as if it were carried on by a distinct and separate person engaged in that relevant business activity. This ensures that an arm’s length approach applies for the purposes of allocating turnover to the relevant business activity.

Weekly amount that may be claimed

(7) Subject to the conditions contained in subsections (10) and (11), the amount that can be claimed for each full week by a qualifying person is the lower of:

  1. (7)(a) 10 per cent (or, where the claim relates to a period specified in subsection (8)(b)(ii)(I) or (II) or to any full week falling within the period beginning on 5 July 2021 and ending on 18 July 2021, 20%) of so much of the average weekly turnover that does not exceed €20,000 and
  2. (7)(b) 5 per cent (or, where the claim relates to a period specified in subsection (8)(b)(ii)(I) or (II) or to any full week falling within the period beginning on 5 July 2021 and ending on 18 July 2021, 10%) of any of the average weekly turnover as exceeds €20,000

subject to a maximum payable amount of €5,000 per week (or where the claim relates to a period specified in subsection (8)(b)(ii)(II), €10,000 per week).

Average weekly turnover is calculated with reference to the definitions of “new relevant business activity” or “established relevant business activity” as appropriate.

The amount payable is referred to as an “advance credit for trading expenses”.

Restart week

(8) Where a qualifying person is entitled to make a claim for a continuous period of not less than three weeks, an additional claim may be made in respect of the week immediately following the date on which the applicable business restrictions provisions cease to be in operation.

This is referred to as the “restart week”.

For certain time periods an enhanced restart week payment is available as follows:

  • Where the “restart week” occurs between 29 April 2021 to 1 June 2021, the restart payment will be an amount equal to two weeks at double the normal rate of CRSS (subject to a maximum weekly amount of €5,000).
  • Where the “restart week” occurs after 2 June 2021, and where the business has not made a claim for an enhanced restart week for the period 29 April 2021 and 1 June 2021 or made a claim for the three week restart week previously, then the restart payment will be an amount equal to three weeks at double the normal rate of CRSS (subject to a maximum weekly amount of €10,000).
  • (9)(a) In all other cases, the standard restart week payment will apply, which is one week at the standard rates of CRSS (subject to a maximum weekly amount of €5,000).

Time limits for making claims

(9)(b) Claims must be made no later than 8 weeks from the date on which the claim period to which the claim relates commences. For claimants who apply to register within the 8-week period, and whose applications are registered after the expiry of the 8-week period, claims must be made within 3 weeks of the date of registration.

(10) Claims made under subsection (8) (the restart week) must be made no later than eight weeks from the date on which the applicable business restrictions provisions concerned cease to be in operation.

Claims in relation to more than one relevant business activity carried on from the same business premises

(11) Where a qualifying person makes a claim in respect of more than one relevant business activity carried on at the same business premises, the amount payable is limited to the amount payable as if it were a claim for one relevant business activity, calculated in accordance with subsection 7(b).

(11)(a)

Partnerships

(11)(b) Where a relevant business activity is being carried on by a partnership, the claims process is as follows.

The precedent partner in the partnership makes the claim for the advance credit for trading expenses in respect of the partnership the amount payable is limited to the lower of the amounts specified in subsection (7)(a)(i) or (a)(ii).

For the purposes of subsections 15 and 16, each partner is treated as having received a portion of the advance credit for trading expenses in accordance with the partnership profit sharing agreement. The precedent partner must provide a statement to each partner with the details of

  1. the partnership name and its business address,
  2. the amount of advance credit for trading expenses claimed by the precedent partner on behalf of the partnership and each partner,
  3. the profit percentage for each partner,
  4. the portion of the advance credit for trading expenses allocated to each partner,
  5. the commencement and cessation date of the claim period, and
  6. the chargeable period of the partnership trade in which the claim period commences.

(12) For the purposes of subsections (17) and (18), references to a person making a claim shall be taken as references to the precedent partner, and for the purposes of subsection (19), section 1077E shall apply as if references to a person were references to each partner and the references to a claim were a reference to a claim deemed to have been made by each partner under subparagraph (i).

Turnover

(13) “Turnover” for the purposes of the scheme is to be construed in line with the correct rules of commercial accounting and is to exclude any amount that might relate to changes in accounting policies.

Calculation of profits or gains: reduction of disbursements or expenses by amount of advance credit for trading expenses

(14) The amount of an advance credit for trading expenses claimed shall be taken into account in calculating the profits of gains for a chargeable period by way of reducing the amount of any disbursement or expense which is an allowable deduction under section 81 and shall not otherwise be taken into account for tax purposes.

(14)(a) Information to be provided at registration stage and claim stage

The information to be provided to the Revenue Commissioners at both the registration stage (subsection (5)(a)) and claim stage (subsection (5)(b)) is as follows:

  • Name, address, Eircode and tax registration number of the qualifying person
  • In relation to a relevant business activity -
    1. Name under which the business activity is carried on
    2. Description of the business activity
    3. Address and Eircode of the business premises where the business activity is carried on
    4. Average weekly turnover of the qualifying person for the period 1 January 2019 to 31 December 2019 (where the business activity was commenced prior to 26 December 2019)
    5. Average weekly turnover of the qualifying person in respect of each business premises to which the relevant business activity relates for the period 1 January 2019 to 31 December 2019 (where a trade is carried on in more than one business premises)
    6. Date of commencement of the activity and the amount of turnover for the period from commencement date to 12 October 2019 (where the business activity was commenced on or after 26 December 2019)
    7. Average weekly turnover in relation to relevant business activities (for both established and new business activities)
    8. The amount of Value Added Tax that became due and payable for the period 1 January 2019 to 31 December 2019 (for established business activities) and commencement date to 12 October 2020 (for new business activities) with reference to taxable periods as prescribed under the Value-Added Tax Consolidation Act 2010.
    9. (14)(b) The amount of other total income excluding the relevant business turnover in respect of which Value Added Tax was charged for the period 1 January 2019 to 31 December 2019 (for established business activities) and commencement date to 12 October 2020 (for new business activities).
    10. (15) Expected percentage reduction in turnover of the qualifying person in respect of the business activity in the claim period
    11. Any other information as deemed required by the Revenue Commissioners

(15)(a)

The Revenue Commissioners, having received all information as outlined in subsection (14)(a) may seek any further information or evidence as might be deemed necessary by them for the purposes of determining claims.

(15)(b)

Claims by companies subsequently found to be ineligible

Where claims have been made by a company for a given claim period, and it subsequently transpires that the company did not meet the eligibility criteria to make a claim for that period and no repayment to the Revenue Commissioners has been made by the company in accordance with subsection (17)(a)(II), then

  • (16) the company shall be charged to tax under Case IV of Schedule D for the chargeable period in which the claim period commences on an amount equal to four times so much of the amount of the claim received that was not permitted, and
  • (16)(a) any amount chargeable to tax under this section will be treated as income against which no loss, deficit, credit, expense or allowance may be set off and will not form part of the income of a company for the purposes of calculating surcharges under section 440.

(16)(b)

Claims by individuals subsequently found to be ineligible

(16)(c) In circumstances where claims have been made by an individual, for a given claim period, and it subsequently transpires that the individual did not meet the eligibility criteria to make a claim for that period and where no repayment to the Revenue Commissioners has been made by the individual in accordance with subsection (17)(a)(II), then

(16)(d)

  • (16)(e) the individual shall be deemed to have received an amount of income equal to five times so much of the amount of the claim received that was not permitted, referred to as the “unauthorised amount”, and,
  • the unauthorised amount will be deemed to be income which arises on the first day of the claim period and is subject to tax under Case IV of Schedule D.

(17)(a) The unauthorised amount is subject to income tax at the standard rate of income tax in force at the time that the advanced credit for trading expenses was paid but will not be subject to PRSI or USC.

No deduction, relief, tax credit or reduction in tax shall be allowed against the unauthorised amount in calculating the tax payable, notwithstanding any other provisions of the Tax Acts.

Any income deemed to arise under subsection (16) will not be taken into account when applying sections 188 or Chapter 2A of Part 15.

(17)(b) Invalid claims and overclaims

An “invalid claim” is one which has not met the qualifying criteria as referenced in subsection (4)(b).

An “overclaim” is one which is the excess of that which the person is entitled.

In both these circumstances the person should notify the Revenue Commissioners without an unreasonable delay, that an invalid or overclaim has been made, and make a repayment to the Revenue Commissioners. The amount of the repayment is as follows:

(17)(c)

  • where an invalid claim has been made, the amount paid in respect of that claim, and
  • where an overclaim has been made, the amount by which the amount paid in respect of that claim exceeds the amount the person was entitled to claim.

Interest in respect of an invalid or overclaim will apply in accordance with section 1080(2)(c) from the date on which the payment is made by the Revenue Commissioners.

However, where the invalid or overclaim was made neither deliberately or carelessly within the meaning of section 1077E, and the person repays the amount to the Revenue Commissioners in compliance with paragraph (a)(II), interest will be determined in accordance with section 1080(2)(c) as if a reference to the date when the tax became due and payable were a reference to the date paragraph (a) is complied with and accordingly no interest payment will be due.

The provisions of subsection (15)(b) in relation to overpayments arising on incorrect or invalid claims is extended to tax payable on unauthorised amounts as constituted under subsections (15) and (16).

Reduced claim periods

(18)(a) For the purposes of subsection 18, ‘claim’ and ‘overpayment’ have the same meanings as in section 960H(1).

(18)(b) A “reduced claim period” arises when a Covid restrictions period or a Covid restrictions extension period ends earlier than anticipated.

(18)(c) If a qualifying person makes an overclaim in respect of a reduced claim period, and that claim is made before the end of the claim period, and the overclaim arises solely as a result of the reduced claim period, the Revenue Commissioners are entitled to recover the excess amount from that person.

(18)(d) They may do so by either setting the amount of the advance credit for trading expenses in respect of subsection (7) or (8) against the excess amount. Where at the end of the specified period an excess amount remains, and a repayment is due to the person in respect of a claim or overpayment, this amount may be set against the excess amount.

(18)(e) In such circumstances, and provided the excess amount is recovered in a reasonable time, the excess amount will not be an unauthorised amount under subsection (15) or (16).

(18)(f) Interest will apply from the end of the specified period in respect of the excess amount.

Claims deemed to claims in connection with a credit

(19) Any claim under section 485 is deemed to be a claim in connection with a credit and thereby falls within the scope of the tax penalties regime as per section 1077E for the purposes of determining an amount in accordance with section 1077E(11) or 1077E(12), a reference to an amount of tax that would have been payable for the relevant periods by the person concerned shall be read as if it were a reference to a claim in respect of a claim period made in connection with subsection (7).

Offences

(20) A person shall be guilty of an offence in relation to delivering incorrect returns and information or assists in delivering such returns in relation to this scheme and subsections (3) to (10) of section 1078 and Section 1079 shall apply to section 485 with any necessary modifications as required.

Care and Management

(21) The administration of the Covid Restrictions Support Scheme is under the care and management of the Revenue Commissioners and section 849 applies for this purpose with any necessary modifications as required.

Guidelines

(22) The Revenue Commissioners shall publish guidelines in relation to the scheme. In particular, the guidelines will cover matters to which persons should have regard when determining whether the Covid restrictions apply to their business premises, and whether as a result of the Covid restrictions, the reduction in turnover test is met.

Publication of details of persons to whom an advance credit for trading expenses has been paid

(23) The information as outlined in clauses (I) (name under which the business activity is carried on) and (III) (Address and Eircode of the business premises) of subsection (14)(a)(ii) will be published on the website of the Revenue Commissioners.

Appeals

(24) Where a Revenue officer determines that a person is not a qualifying person for the purposes of subsection(4)(b), that Revenue officer shall notify the person in writing and the person can appeal that determination within 30 days of the date of notice to the Appeal Commissioners. Where the Appeals Commissioners determines that the person is a qualifying person for the purposes of subsection (4)(b), the eight-week period under subsection (8) shall commence on the date that determination is issued by the Appeal Commissioners.

Section 485 shall be deemed to come into operation on the 13 October 2020.

Relevant Date: Finance Act 2021