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moreAn interview with Aidan Byrne, Partner & Head of Tax at RSM Ireland. As published in Business Plus Ireland's Leading Tax Advisers edition, September 2020.
Staff at RSM Ireland were disappointed at the recent government request for businesses to continue working remotely. “We were all looking forward to re-engaging in a safe way,” says Byrne. “Luckily we have been paperless for a number of years so have been able to continue operating remotely without too much inconvenience.”
wage subsidies
The TWSS ends at the end of August with the new EWSS scheme continuing. Many businesses have already been asked by Revenue to provide relevant information on turnover reduction in Q2 2020, Covid-19 impact and employee details. All employers (c.70,000) who availed of the scheme will be contacted through ‘My Enquiries’. There were criteria to qualify for the TWSS that were subjective, one being inability to pay wages, taking other business costs into account. Given the economic uncertainty that surrounded the lockdown, we would hope that the approach to the subsequent review of eligibility is reasonable.
Employers availing of EWSS going forward must also meet a new requirement to hold a valid tax-clearance certificate and this is an area where businesses may require assistance. We would anticipate that businesses availing of EWSS from September onwards will be more sector specific than under TWSS.
WAREHOUSING TAX DEBT
The Revenue Commissioners have introduced a relatively simple process for securing the warehousing of debt, and typically respond in a short period, giving clients certainty as to whether they qualify for the relief. Basic information on the tax due that the client wishes to warehouse and the broad reasons behind the request need to be submitted.
Our experience has been very positive, and we are impressed at the speed of turnaround of these requests. From a cashflow management perspective, it is a significant relief in times where cash is key to continued commercial viability.
SELF-EMPLOYED TAX RELIEF
Self-employed individuals can claim their 2020 losses against their profits for the 2019 tax year, thus reducing the amount of income tax payable on those profits. A €25,000 limit on the total amount that can be carried back will apply. An acceleration of the loss relief is provided, allowing self-employed individuals to make interim claims based on the estimated amount of relief available to them.
Carry back of losses by the self-employed is new, as previously losses were only available for carry forward by continuing businesses. Many of the self-employed will be finalising their 2019 tax returns between now and mid-November and so 2020 loss relief can be considered at that point.
CORPORATION TAX LOSS RELIEF
This measure allows companies to accelerate claims to offset trading losses incurred in accounting periods affected by the Covid-19 pandemic against taxable profits of the preceding period. Claims may be made prior to the end of the period of assessment to which the losses relate.
Companies should act now to prepare claims based on current management accounts in order to maximise the cashflow timing benefit of this measure. The claim process is straightforward, and documentation is not required to support the filing of an interim claim. In the short term, businesses should hold accurate management accounts to assess and support their entitlement to make a valid claim.
BUDGET 2021
Reduction of the CGT rate to encourage transactions would be welcome. Corporate transactions have a way of getting the economy going, and anything that encourages that would be good. Thought should also be given to an increase in the amount qualifying for the Entrepreneur Relief rate, bringing it more in line with the UK scheme.
An increase in the tax-free amount that can be paid to remote workers should also be considered. The current daily allowance of€3.20 is somewhat laughable, bearing in mind the positive effects home working has on wider society.
As seen in the Business Plus, September 2020.
