Scheme to aid SMEs hit during Covid now causes them more f inancial woe
Orange sky at night, volcanologists’ delight
A SCHEME to ease the plight of small businesses is causing even more financial and emotional stress for them, they say.
Since the Covid pandemic shot down the economy in March 2020, small businesses have struggled to return to previous levels of trade.
Businesses say this is due to remote working decimating citycentre business, the war in Ukraine, the cost-of-living crisis, spiralling energy bills, higher bills for food, and a raft of new employment legislation.
They say the ending of the reduced rate VAT for tourism and hospitality, from 9% back to 13.5%,
‘These were only a bandage solution’
which netted the Government a record surplus of €500million, has also hit small and medium enterprises (SMEs) hard.
The decision means Ireland now has the third-highest hospitality VAT rate in Europe.
In an attempt to ease the plight of small businesses, Finance Minister Michael McGrath said that under a new scheme, the interest rate applicable to warehoused debt owed to the Revenue would be reduced to 0%.
The changes also included the promise of an extended long-term repayment scheme.
At the start of the year around 58,000 customers were availing of the Debt Warehouse Scheme (DWS) – whereby a business deferred paying taxes during the pandemic – with a balance of €1.72billion outstanding.
Businesses using the DWS have until May 1 to pay their full debt, or engage with Revenue to plan paying it of.
Mr McGrath said: ‘This Government is acutely aware of the ongoing cost pressures faced by businesses and is determined that viable businesses are given every chance to succeed in a challenging trading environment.’
Revenue also pledged: ‘We will provide businesses, having regard to the circumstances of each individual business, with every possible flexibility in managing the debt payment.’ But businesses say they’ve been hit by what one source called ‘a Kafkaesque barrier of red-tape and rules and significant costs’. A source said engaging with Revenue on a repayment plan is ‘costing us thousands of euro in accountancy and legal fees’. Commenting on the crisis, Restaurants Association of Ireland chief Adrian Cummins said: ‘It’s important to note that when Mr McGrath announced the positive reforms, we made it clear these were only a bandage solution when it comes to the crisis facing food-led hospitality.
‘The Restaurants Association of Ireland has received countless calls and emails from distressed members highlighting that the Revenue has not been adhering to the principle set out by Mr McGrath that no viable business should be shut down as a result of warehoused debt, demanding large deposits and offering very limited times for repayments.
‘We’re now looking to meet with the minister to bring his attention to the fact that businesses have complained to us about the Revenue’s application of his debt warehousing reforms.’