Additional Supports for businesses impacted by COVID-19
Covid Restrictions Support Scheme
Finance Bill 2020 was published on 22nd October, setting out the draft legislation to introduce the measures announced in the Budget on 13th October.
With the country moving to Level 5 of the COVID recovery plan, even more businesses have found themselves having to close and as such will be very interested in the application of the CRSS.
The CRSS is a targeted financial support for businesses most severely impacted by COVID restrictions and forced to closed. Many businesses should be able to qualify such as hotels, bars and restaurants and non-essential retailers. Generally businesses are required to close to varying degrees from Level 3 to Level 5.
In the Minister’s budget speech he announced “The scheme will operate on a self-assessment basis and qualification will require a business to demonstrate that their turnover has been severely impacted; that is it may not exceed 20 per cent of the turnover for the corresponding period in 2019.”
In a welcome change that 20 per cent limit has been increased to 25 per cent.
Key points from the legislation are:
1. Qualifying for CRSS
To qualify, the business must meet the following criteria
- be carrying out a trade (Schedule D – Case I)
- from a premises located in area impacted by the COVID-19 restrictions.
- The business must have been required to shut their premises or operate at significantly reduced levels resulting from the restrictions.
- The business must demonstrate that the turnover for the claim period will be no more than 25% of the average weekly turnover of the business in 2019 (or average weekly turnover in 2020 in the case of a new business).
Where the trade supplies customer at more than one business premises, the trade carried on at each business premises is looked at separately in determining whether the conditions for the CRSS are met.
The scheme also applies where customers do not attend a business premises. In these cases apportionment may be required on a “just and reasonable” basis where there is more than one business premises.
2. Other Requirements
In addition to meeting the criteria above to qualify a business must also:
Have an up to date tax clearance certificate;
- Be fully VAT compliant;
- Register to claim the CRSS on ROS;
- Make a declaration that the conditions to qualify have been met;
- Intend to continue trading once the restrictions are lifted.
3. The Amount Available
The support will be provided by way of an Advance Credit of Trading Expenses (ACTE) for an amount equal to 10% of the average weekly turnover of an affected business up to €20,000 and 5% thereafter, subject to a maximum weekly payment of €5,000, for each week that their business is affected by the COVID-19 restrictions.
Average weekly turnover €15,000
Claim – 10% of €15,000 = €1,500
Total - €1,500
Average weekly turnover €50,000
Claim – 10% of €20,000 = €2,000
5% of €30,000 = €1,500
Total - €3,500
Average weekly turnover €100,000
Claim – 10% of €20,000 = €2,000
5% of €80,000 = €4,000
Total - €5,000 – subject to maximum weekly payment.
4. Procedure to Submit a Claim
The scheme will be administered through Revenue’s Online System (ROS). To register the business must provide certain information such as description of the business and the location.
Once registered they will be an electronic claim form to be completed, setting out details such as the average weekly income from the corresponding period and the reduction in turnover for the claim period. A declaration that the conditions to qualify are met will also be required.
5. Timescale for Submitting a Claim
A claim in respect of the ACTE should be made no later than 8 weeks from the date the claim period commences
6. Tax Treatment of the ACTE Payment
The ACTE payment is an advance of tax deductible business expenses.
Therefore the tax deductible expenses in the tax computation must be reduced by the amount of the payment received.
Calculating Taxable Profits for 2020
ACTE payment received €50,000
Trading Income €500,000
Tax deductible expenses €450,000 reduced by ACTE payment
received of €50,000
Taxable profit €100,000 (€500,000 – (€450,000 less ACTE €50,000))
7. Claims Made in Error
Where a claim has been made in error and not repaid by the claimant, they will be come liable to tax on a multiple of the amount claimed. For companies the multiple of the unauthorised amount claimed will be 4 and for individuals, the multiple will be 5.
Individuals are taxed at the standard rate of income tax (i.e. 20%).
The income is taxed in both cases under Case IV of Schedule D without any entitled to offset losses or expenses. Interest will also apply from the first date of the claim period.
The company’s tax rate on Case IV would be 25%. As the company’s tax rate is higher, the multiple applied is lower, which should provide the same tax result in both cases.
8. Scheme Duration
The scheme currently runs to 31 March 2021. Under the Finance Bill it can be extended beyond this date, but no later than 31 December 2021.
9. Finance Bill
Section 11 of Finance Bill 2020 contains details of the measure.
Restart Grant Plus
An enhanced Restart Grant now called the Restart Grant Plus Scheme operates through a system of rebates and waivers of commercial rates payments from 2019. Companies will receive a total amount equivalent to no more than their 2019 rates bill and there will be a cap per business of €25,000 (up from €10,000). The grant can be used to pay ongoing fixed costs, for replenishing stock and for measures needed to ensure employee and customer safety. Further payments may be available to companies which have already received funding from the original Restart Grant.
Grants of between €4,000 up to a maximum of €25,000 are available. To qualify for the scheme, enterprises must have:
- 250 employees or less;
- Turnover of less than €100,000 per employee; and
- Reduced turnover by 25% as a result of COVID-19
Those that accessed funding through the previous round of the scheme are eligible for a second top-up payment to a total combined value of the revised maximum grant level.
For information on how to apply for the Restart Grant Plus Scheme, please click here.
If you need any assistance in preparing your application, please do not hesitate to speak with our team.
Microfinance Ireland COVID-19 Business Loan
In order to apply for finance up to €50,000, the business must provide a declaration to Microfinance Ireland that they meet the following eligibility criteria:
- A minimum of 15% of actual or projected turnover or profit in the business is negatively impacted by COVID-19;
- The business is having difficulty in accessing finance from Banks and/or other commercial lending providers;
- The business has fewer than 10 full-time employees;
- Less than €2m annual turnover;
Balance Sheet with Net Worth/Capital Account/Equity that does not exceed €2m.
Features of the loan
- Business Loans up to €50,000 for eligible micro-enterprises (Businesses with less than 10 employees and up to €2m annual turnover) that are currently trading
- Loans may be used for working capital and required business changes* as a result of COVID 19
- Loan terms up to a maximum of 3 years*
- Six months interest free and repayment free moratorium, with the loan to then be repaid over the remaining 30 months of the 36-month loan period
- Interest rate of 4.5% if submitted through Local Enterprise Office and 5.5% if you apply to Microfinance Ireland directly
- No fees and/or hidden costs with fixed repayments with no penalty for early repayment
* By exception, capital expenditure may be funded up to 5 years. Interest only period may be granted for a longer period.
This will provide business owners with a once-off grant of up to €1,000 to re-start their business which was closed due to the COVID-19 Pandemic.
Eligibility criteria is outlined as follows:
The Grant will be awarded to self-employed people who:
- are tax and PRSI compliant
- are not liable for commercial rates
- have been in receipt of the COVID-19 Pandemic Unemployment Payment and have closed their claim after 25th June;
- have reopened their business which was closed due to the pandemic
- employ less than 10 people
- have an annual turnover of less than €1 million
- are not eligible for COVID-19 Business Restart Grant or similar COVID-19 business re-start grants from other government departments
- can produce VAT receipts/invoices in respect of business re-start costs and expenses claimed.
Trading Online Voucher Scheme
The expanded Trading Online Voucher Scheme is designed to assist small businesses with up to 10 employees to trade more online, boost sales and reach new markets.
It offers financial assistance of up to €2,500 with co-funding of 10% from the business* along with training and advice to help your business trade online.
Businesses that have already received a Trading Online Voucher can now apply for a second voucher, where upgrades are required.
Eligibility criteria is outlined as follows:
- Limited or no e-commerce presence;
- 10 or less employees;
- Turnover less than €2m;
- Applicant business must be trading for at least 6 Months**;
- Business must be located in the area covered by the LEO to whom they make their application i.e. LEOs cannot accept applications from businesses located outside their jurisdiction.
**applicant business must provide clear proof of trading for a minimum of 6 months to their Local Enterprise Office
*For applications received from April 7th 2020 until September 30th 2020. Further eligibility, terms and conditions apply.
As with any of the information relating to COVID-19 support measures outlined on our website, should you require guidance on how to access the initiatives relevant to you and your business, please do not hesitate to get in contact with our advisory team.