Budget 2021: Covid Restrictions Support Scheme

14 Oct 2020 | 11.25 am

Budget 2021: Covid Restrictions Support Scheme

Turnover must have collapsed by 75% or more, explains KPMG's Marie Armstrong

14 Oct 2020 | 11.25 am

KPMG partner Marie Armstrong explains how the lockdown Covid support scheme will operate

The minister announced the introduction of a new Covid-19-related support scheme, the Covid Restrictions Support Scheme (CRSS), specifically targeting sectors that have been affected significantly by the restrictions set out in the government’s plan for ‘Living with Covid-19’.

The CRSS applies from 13 October 2020 until 31 March 2021, and will operate on a self-assessment basis.

The scheme as currently envisaged will apply to businesses operating in sectors that are affected by Level 3 Covid-19 restrictions, and in particular the accommodation, food, arts, recreation and entertainment sectors. Other sectors may qualify if Level 4 or 5 restrictions are imposed, with the result that they are either forced to close or reduce their footfall.

While these other sectors were not expanded upon by the minister, we would expect that the health and leisure and non-essential retail industries should qualify if additional Covid-19 restrictions are imposed.

Whether non-customer facing industries, such as the construction industry, will be eligible for the scheme is uncertain, but from the information available so far, this appears unlikely, given the minister’s reference to a lack of “access by customers” being an eligibility requirement of the scheme.

In order to qualify for the scheme

  • Customer access to the business premises must be directly prohibited or restricted under Level 3 or higher of the government’s restrictions
  • The business’s turnover must not exceed 25% of the turnover for the corresponding period in 2019.

Once these two conditions are satisfied the business can apply to Revenue for a cash payment (similar to the TWSS scheme). This cash payment represents an advance credit for trading expenses that are deductible for income and/or corporation tax purposes (ACTE) relating to the period (no earlier than Budget Day) in which the restrictions are effective.

Payments will be calculated, subject to a maximum weekly payment of €5,000, based on 10% of the business’ first €1 million of turnover, and 5% of any excess.

Once Level 3 restrictions or above apply to a county/region, qualifying businesses can enrol in the CRSS in the first week the restrictions apply, with valid claims for the entire period the restrictions are imposed being paid within 2-3 working days. The payments will cease automatically once the Level 3 restrictions or above end.

Where restrictions are extended by the government, an additional claim can be made. It is not yet clear whether or not such payments will be subject to tax, but we would not expect tax to be imposed, as this would run counter to the scheme.

The CRSS is a very welcome development to affected businesses, albeit somewhat limited. However, it must be considered in the context of the existing wage subsidy scheme and the reduced 9% VAT rate for the hospitality and tourism industries as part of a package of measures.

It is hoped that the measures announced by the minister will help to prevent the closure of businesses which operate in the sectors most exposed to Covid-19, allowing them to operate successfully once the relevant restrictions have been lifted.

The estimated cost of the scheme is €40m for each week Ireland is at Level 3 in every county.

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