CORMAC DOYLE
Partner Crowe Ireland
WAREHOUSING TAX DEBT We strongly advise clients availing of this scheme to plan their cashflows out to 2022, to incorporate the repayment of the warehoused debt, and to monitor their cash and update cashflow forecasts at least monthly. This will enable them to provide Revenue with the reassurance that the business will have the ability to repay the warehoused debt. It is important that any repayment plan is realistic and that the agreed payment dates and amounts are met.
TAX RELIEFS Allowing self-employed individuals to set back trading losses to the preceding tax year is a measure that should continue beyond the Covid-19 crisis. When finalising their 2019 returns, taxpayers should consider the impact of potential loss surrenders from 2020 to determine whether they need or should make pension top-ups.
The principle of companies setting back losses to the preceding year is well established. However, many small companies who would benefit from this scheme do not have the internal resources to prepare monthly or quarterly management accounts.
Where such companies had Corporation Tax liabilities in the prior period, they should engage with their external adviser to prepare management accounts that can be used to substantiate any claim. Where they become aware of any under/overstatement in those accounts, they should also be able to prove that they have taken prompt action to increase or reduce the claim as necessary.
WAGE SUBSIDIES The TWSS was of huge benefit to employers and enabled many of them to develop a medium-term strategy for their businesses when the crisis was at its bleakest. We are now on version 17 of the guidance and this underlines all the uncertainties surrounding the administration of the scheme.
To date, Revenue has adopted a pragmatic approach and it is hoped that this approach will continue for the deferred employee tax liabilities. In an ideal world, these employee liabilities would hopefully be waived in full. The most likely scenario is that these liabilities will be collected over a number of years.
Employers should reassure employees that this is not a case of cash moving from their pocket to the employer’s pocket and that the Covid-19 crisis has led to a drastic drop in business and profits.
BUDGET 2021 Owner-managed businesses have borne the brunt of this crisis and government should bring in a generous package that these businesses across the country can avail of. Measures that they might consider are: abolishing all close company rules, which are arcane; 100% capital allowances for micro businesses; tax incentives/relief for business reorganisations; tax credit incentives for expenditure on market research; marketing and capital costs incurred on repositioning businesses; finding new customers; or adopting new business strategies and technologies.