JOHN FITZGERALD

Partner McInerney Saunders

“The practice is currently recruiting for its tax department and looking forward to a busy tax-filing season,” says partner John Fitzgerald. “Tax and payroll support services are extremely important parts of our practice and providing quick responses has greatly assisted our clients with their decision making,” he adds.

WAGE SUBSIDIES Many employees will potentially be facing a tax bill on the subsidy amounts received through TWSS, and in general it will not be possible to quantify the tax liability until after the end of the year. It remains to be seen if government will provide specific relief for employees by either exempting the amounts received or perhaps introducing a sort of ‘TWSS Tax Credit’ that could offset some or all of the liability.

Revenue placed all employees on a ‘Week 1’ basis from 21 June 2020. Where employees have a balance of tax to pay arising from TWSS, Revenue has indicated that they will spread the collection of this

by adjusting the employee’s tax credits over a number of years, which is in line with normal practice.

Pandemic Unemployment Payment income will also be subject to tax.

WAREHOUSING TAX DEBT Tax debt warehousing is really helpful for businesses that have fallen behind in their VAT/PAYE payments. The warehoused tax debt will effectively be a 12-month interest-free loan, after which point interest of 3% will be charged. The 3% interest rate can also apply to tax debts that had built up prior to the onset of Covid-19, where businesses enter into a Phased Payment Arrangement (PPA) with Revenue, and this can result in a significant benefit.

The warehousing facility automatically applies to certain businesses, with other larger businesses needing to contact Revenue directly to be included. Businesses will need to ensure that all tax returns are up to date, so that the amount of tax to be warehoused can be quantified.

And during the course of the arrangement, businesses will need to ensure that current tax returns and payments are up to date. Tax clearance will be unaffected by the ‘warehousing’ arrangements and Revenue has indicated that any refunds or repayments due to the business will be released i.e. they will not be automatically offset against the outstanding VAT/PAYE liabilities unless requested.

We are advising clients to come and talk to us if they need assistance in getting outstanding returns filed, or in agreeing arrangements with Revenue.