Late taxes put Covid payments atriskforupto 4,500 companies
About 4,500 businesses are at risk of losing pandemic subsidies worth €40m a month as well as access to Revenue’s debt warehousing because of failure to file tax returns on time.
Revenue is writing to the 70,000 businesses availing of the debt warehousing scheme to remind them to file outstanding returns and bring their tax affairs up to date to continue participating.
While most businesses are complying with the requirement, a significant number are behind on their tax filings.
Of those, approximately 4,500 are still regularly submitting claims for support under the Employment Wage Subsidy Scheme (EWSS) and/or the Covid Restrictions Support Scheme (CRSS) seeking financial support from the State. Subsidy payments of €40m were made to these businesses in February.
“A key condition for businesses to continue to avail of the Debt Warehousing Scheme is that all tax returns must be filed as they fall due,” said Revenue collector-general Joe Howley. “This is the case even where the liability cannot be paid or where, for example, the liability may be nil if the business is not currently trading due to Covid-19 restrictions.”
Companies that lose access to the debt warehousing scheme due to late filing are in danger of losing tax clearance certification. Because tax clearance is an eligibility requirement for businesses availing of support under the EWSS and the CRSS, its loss would result in the suspension or delay of subsidy payments, Mr Howley said.
“Consistently meeting this single obligation means businesses can remain in the Debt Warehousing Scheme, keep their tax clearance and, where they are eligible, continue to access EWSS and CRSS support payments,” he said.
“Without tax clearance access to vital liquidity support provided by the subsidy schemes will be withdrawn.”
Under the debt warehousing scheme, businesses can temporarily park tax debts if their trade has been severely impacted by Covid-19 restrictions. The debts remain warehoused interest free for the first 12 months after the business resumes normal trading.
Once the interest-free period expires, the debt can roll over onto a phased payment plan at a reduced interest rate of just 3pc, versus the standard 8pc to 10pc range per annum. Revenue has been running several compliance review exercises on the tens of thousands of businesses using Government pandemic subsidy schemes.
Two weeks ago, Revenue wrote to 3,200 employers that claimed the Temporary Wage Subsidy Scheme (TWSS) but have not reported related payments to the workers it was claimed for.
Revenue officials are seeking documentation to show this money actually went to those workers instead of staying in the businesses without being paid forward.
The businesses could be forced to pay money back in full if they cannot provide proof the money went to employees.
The 95pc of businesses that have cooperated with the TWSS reconciliation process are due to receive statements this month showing whether they were overpaid or underpaid under the scheme.
Companies that received more money than they paid out in subsidised wages will have until the end of June to accept Revenue’s calculations of the amount they will have to return.
The reconciled difference will be added to the tax bills of businesses that owe money from overpayments or will be returned to companies that were underpaid by Revenue during the scheme.
Companies that met tax filing deadlines in 2020 will be eligible to put any resulting debts into Revenue’s expanded tax warehousing scheme.
Revenue has also been investigating whether employers and employees who availed of TWSS were eligible to receive the subsidy.
Approximately 2,300 employers were subjected to a detailed review following the initial compliance checks. Of these, approximately 1,300 have been completed with enquiries continuing on the rest.