04 Nov 2020 | 08.00 am
Registration Open For Covid Restrictions Support Scheme
Average weekly turnover decline must be at least 75%
04 Nov 2020 | 08.00 am
Revenue has announced that that eligible businesses can now register for the Covid Restrictions Support Scheme.
Registration for CRSS is a necessary first step for businesses to access the scheme. A claim portal in respect of CRSS will be available via the eRepayments system on ROS from mid-November.
Details of the CRSS were published in the Finance Bill 2020. Pending enactment of the necessary legislation Revenue has advised that registration for the scheme is now available to eligible businesses, or the tax agent acting on their behalf, via the e-Registration facility in ROS, with over 700 businesses already registered.
CRSS is a targeted support for businesses significantly impacted by restrictions introduced by the government under public health regulations to combat the effects of the Covid-19 pandemic.
Its key features are:
• CRSS provides support for businesses that are forced to temporarily close or to operate at significantly reduced levels because of Covid restrictions that either prohibit, or significantly restrict, customers of the business from accessing the premises in which the business is carried on.
Generally, this refers to Covid restrictions at Level 3, 4 or 5 of the Government’s Plan for Living with Covid-19, but certain businesses may qualify for the support where lower levels of restrictions are in operation.
• The scheme is available to affected self-employed individuals and companies who carry on a trade or trading activities, the profits from which are chargeable to tax under Case I of Schedule D, from a business premises located wholly within a geographical region for which Covid restrictions are in operation. It is also available to persons who carry on a trade in partnership.
• To qualify under the scheme, a business must be able to demonstrate that because of the Covid restrictions the turnover of the business in the period for which the restrictions are in operation, and for which a claim is made, will be no more than 25% of an amount equal to the average weekly turnover of the business in 2019 (or average weekly turnover in 2020 in the case of a new business) multiplied by the number of weeks in the period for which a claim is made.
• Qualifying taxpayers will be able to make a claim for an amount equal to 10% of their average weekly turnover in 2019 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 restrictions.
• For businesses established between 26 December 2019 and 12 October 2020, the claim will be based on their actual weekly average turnover in the period between the date of commencement and 12 October 2020 (subject to the weekly cap of €5,000). Payments made under the scheme will be treated as an advance credit for trading expenses.
• To make a claim under the scheme, a number of other conditions must be satisfied including that the person has an up to date tax clearance certificate and complied with their Value Added Tax obligations. The person must register to claim on the ‘Revenue Online Service’ and make a declaration that they satisfy the conditions to make a claim under this section. Where Covid restrictions for a geographical region are extended beyond the date on which they were due to expire, a new claim is required for each extension period.
• Provision is made for the publication of the name of claimants of CRSS on Revenue’s website.
• The scheme will operate from 13 October 2020 to 31 March 2021 and there is provision for the Minister for Finance to vary aspects of the scheme by Ministerial Order.
Accountants PwC commented: “Payments made under the CRSS are claimed through the ROS account of the business and are referred to as ‘an advance credit for trading expenses’. Although the payment is not to be treated as taxable income, the mechanics of the CRSS are such that it is effectively taxable (in most instances).
“This is due to the fact that, for tax purposes, any trade related expenditure that would otherwise be allowable is reduced by the amount of the advance credit for trading expenses received.
“To illustrate, a business that has €8,000 in allowable expenses and receives a €5,000 CRSS payment will end up having net tax allowable expenses of €3,000. A similar business that had tax allowable expenses of only €4,000 would have its tax allowable expenses reduced to zero but should not be taxed on the excess of €1,000.”
PwC’s view is that while the CRSS is a very welcome initiative for struggling businesses, the firm is concerned that there are a huge number of SMEs that may not satisfy the ‘75% reduction in turnover’ test and may therefore miss out on this lifeline.