New Covid wage subsidy denied to companies without tax clearance

Revenue estimates 16,000 currently subsidised businesses do not meet new criteria

Revenue has not clarified how business would demonstrate such a fall-off in business or prove that it was Covid-related. Photograph: iStock

Revenue has not clarified how business would demonstrate such a fall-off in business or prove that it was Covid-related. Photograph: iStock

 

Companies that do not have their tax affairs up to date will not be able to secure Government help to subsidise staff pay under the new Employment Wage Subsidy Scheme (EWSS).

And any business looking to tap financial support through the scheme will have to “demonstrate” that they will experience a 30 per cent fall in turnover between July 1st and the end of the year, and that any such decline is due to Covid-19.

The scheme replaces the temporary wage subsidy scheme (TWSS) in place since the early days of the Covid-19 crisis. The two schemes will run in tandem until the end of August at which point the TWSS programme will cease.

The new scheme will provide a flat-rate subsidy to employers who qualify. The amount will be based on the numbers of paid and eligible employees on their payroll. This is a change from the existing temporary wage subsidy which pays employees via their companies.

It will pay a weekly sum of €151.50 for any worker earning gross pay between €151.50 and €202.99 and €203 for employees earning between €203 and €1,462 a week gross.

The money will be paid monthly in arrears. Employers will also be able to avail of a reduced PRSI rate of 0.5 per cent.

Revenue has not clarified how business would demonstrate such a fall-off in business or prove that it was Covid-related.

The 30 per cent slide in sales or orders will be measured against the year ago period. It will be assessed against the six months in its entirety rather than comparing a month with that same month in 2019.

Tax clearance

“Additionally, and unlike TWSS, the employer must have tax clearance to be eligible to join the EWSS and remain tax clear to continue receiving the EWSS benefits,” said collector general Joe Howley.

This will be unfamiliar to some businesses. At present, tax clearance is required by businesses only when applying for certain licences or grants. “As such, many employers have never needed to apply for tax clearance because of the nature of their business,” the Revenue Commissioners said. “However, to join the EWSS and remain eligible for ongoing EWSS payments, a business must hold tax clearance.”

The tax agency said that 16,000 employers that had registered for the temporary wage subsidy scheme did not currently hold tax clearance certificates, around 30 per cent of all applicants to the scheme.

Tax clearance essentially is Revenue confirmation that a business has its tax affairs are in order.

Mr Howley urged employers to apply immediately for clearance if they had not already done so.

“An application for tax clearance can be made quickly and easily online,” he said. “Successful applications will be confirmed on screen in ‘real-time’. Similarly, any business who does not meet the requirements for tax clearance will be shown the reasons why the application was not successful.

“Once the outstanding matters have been addressed, the business can then reapply and get tax clearance.”

July stimulus

He also noted that, under the July stimulus package, there are measures in place to warehouse Covid-related tax debts once the correct paperwork if filed. Businesses with older tax debt or debt not related to Covid can still secure clearance if they enter a phased payment arrangement, Mr Howley added.

Employers who have registered for the existing temporary wage subsidy scheme will have to register anew for the employment wage subsidy scheme before applying for payments.