MICHAEL ROONEY
Tax Partner KEVIN McLOUGHLIN Head of Tax EY Ireland
EY tax partner Michael Rooney says the firm faced some challenges in adapting to working from home in the first few months of the crisis. “Our EY team were working long hours helping clients navigate through the TWSS minefield and looking at opportunities for cost optimisation,” he says. “We have focused on ensuring our own teams are looking after their mental and physical health during this period by introducing virtual exercise classes, meditation sessions and ensuring everyone took their holidays. We also have daily team video calls to keep everyone connected.”
WAGE SUBSIDIES Revenue made it clear that the TWSS is a taxable payment, even though the tax has not been collected through PAYE. We understand that employees will either pay the taxes by netting it off against any tax refunds they would have been entitled to at year end, or else it will be collected through reducing their tax credits in future years.
The TWSS created a lot of added complexity for employers with the different levels of payments, calculations of the top-up that applied and the tapering rules. Hopefully though, the process (which is still to be finalised by Revenue) will be straightforward, so that employers will only need to operate the RPN provided in order for any taxes due to be repaid to Revenue.
EY held a series of webinars with business leaders over the last number of months and the webinar with Revenue on the TWSS had the highest attendance, so clearly this was the top issue facing our clients. The EWSS is less complex to administer for clients, and while the amounts paid by Revenue are not as favourable as the TWSS it provides a longerterm support for businesses until the end of March 2021. Michael Rooney
WAREHOUSING TAX DEBT As payroll and taxes/VAT are two of the biggest costs for businesses, the relaxation in payment of these debts to Revenue has offered much-needed liquidity for our clients. Over 70,000 employers have availed of this, which is even
‘The TWSS created a lot of added complexity for employers’
greater than those that registered for the TWSS. However, it is vital that clients are filing their payroll and VAT returns on time, to allow them to participate in the scheme.
Our advice to clients is to monitor closely the amounts of debt arising and where possible, to set aside and ring-fence the income to pay for these debts. If you do need to dip into this income due to a liquidity crisis, have a documented plan for how you will repay the debt and the timeline for doing so. Michael Rooney
SELF-EMPLOYED TAX RELIEF I think I would give Revenue 9/10 on this one in terms of the guidance issued, with very clear examples and a template application letter for this relief, which can then be submitted through My Enquiries. The relief can provide self-employed individuals with an income tax refund for 2019 of up to €10,000 if they claim the maximum loss carry back of €25,000. The relief can be claimed now based on an estimate of the losses that you will incur during 2020, so that you do not have to wait until 2021 to receive the tax refund. Michael Rooney
CORPORATION TAX LOSS RELIEF As with many other Covid-19 related measures, this one attempts to improve cashflow for businesses suffering losses, enabling earlier claims to refunds. The challenge for businesses will be ensuring as best they can that the data they work off for the interim claims are as accurate as possible — essentially working off management rather than audited statutory financial accounts. Kevin McLoughlin
BUDGET 2021 To try to counter the effects of Covid-19 on business, tax measures to date have all been relieving, either direct reduction such as the short-term lowering of the standard VAT rate to 21%, or through cashflow alleviation through the deferral of tax payment and the facility to claim reliefs early.
Given the likely extent of the fiscal deficit in 2020 and over the next few years, it will be difficult to see how the focus would continue long term on tax-relieving measures. It will be interesting to see how the government strikes the right policy choices in terms of raising receipts, including tax rises, continued significant use of debt, and targeted tax incentive measures. Given the extent of the announcements in the stimulus measures, it may well be next year before these choices start to become apparent. Kevin McLoughlin
‘We made sure our teams were looking after their mental health’