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Key Covid-19 Tax Measures

08 May 2020

Angela Fleming, Tax Partner, discusses the key Covid-19 tax measures taken by revenue as a result of the cashflow and trading difficulties faced by businesses.

Following the announcement by An Taoiseach on Thursday 12 March of measures aimed at interrupting the transmission of COVID-19, Revenue announced some key advice and actions taken to assist taxpayers experiencing cashflow and trading difficulties arising from the impacts of the virus.
 
We have outlined the key measures below.
 

VAT and PAYE Liabilities

Revenue have confirmed that the application of interest on late payments of the following have been suspended:
  • VAT – January/February, March/April and May/June liabilities
  • PAYE – February, March, April, May and June liabilities
Taxpayers should continue to file their tax returns on time, even if payment of the resulting liabilities, in whole or in part, is not possible. Revenue state that where, due to the virus, the key personnel responsible for preparation of tax returns and computation of liabilities are not available, the strong advise is that tax returns are filed on a “best estimate” basis.
  
The interest suspension applies automatically for SME taxpayers, and upon request for larger businesses. An “SME” (per Revenue) is a business with turnover of less than €3 million who is not dealt with by either Revenue’s Large Cases Division or Medium Enterprises Division.
 
Revenue have also confirmed special measures for the “warehousing” these tax liabilities. Please see "Revenue Warehousing of Tax Liabilities" for more details.
 

Corporation Tax

Revenue have confirmed that the application of a surcharge for Corporation Tax returns and iXBRL financial statements (where applicable) for accounting periods ending June 2019 onwards (i.e. due by 23 March onwards) is suspended until further notice.
 

Relevant Contracts Tax (RCT)

The RCT rate review scheduled to take place in March 2020 has been suspended. This process assesses the current compliance position of each subcontractor in the eRCT system and determines their correct RCT deduction rate, i.e. 0%, 20%, or 35%.
 
The review has been suspended on the basis that the process could result in a subcontractor’s RCT rate increasing due to changes in their compliance position. 
 
Subcontractors and their agents may still undertake a self-review of their RCT rate via ROS if they feel that their rate should be lower. 
 

Professional Services Withholding Tax (PSWT)

In order to accelerate interim refunds of PSWT, Revenue have confirmed that they will accept refund claims via MyEnquiries. Legible copies of the original F45 and F50 documents must be attached to the claim. The originals should be maintained. In the event that Revenue request the originals (e.g. at a later date), and these are not provided, refunds may be withdrawn.
 
Furthermore, Revenue have confirmed that, where the F45 cannot be issued due solely to the current Covid-19 circumstances, they will accept a written statement (in the prescribed format) issued by the accountable person and attached to the MyEnquiries claim.
 

R&D Tax Credits

Revenue have confirmed that where Corporation Tax returns are filed early this year in respect of 2019 periods, they will facilitate early payment of R&D tax credit cash refunds due to companies.
 
A request for early payment must be submitted via MyEnquiries once the return has been filed.
 

Customs

Revenue confirmed that critical pharmaceutical products and medicines will be given a Customs “green routing” to facilitate uninterrupted importation and supply.
 

Other Measures

Revenue further confirmed:
  • All debt enforcement activity is suspended until further notice.
  • Current tax clearance status will remain in place for all businesses over the coming months. 
  • They will continue to prioritise the approval and processing of repayments and refunds, primarily VAT and PSWT.
  • The processing of repayments and refunds will also be prioritised in the absence of iXBRL accounts as part of the Corporation Tax filings for accounting periods ending on or after March 2019.
Conclusion
 
The first of the Revenue tax measures were announced within days of the Government announcement on 12 March. The above reflects the evolution of those measures over the period since then.
 
Revenue’s quick response to the impact of COVID-19 on businesses is welcomed as many Irish businesses are experiencing significant cashflow and trading difficulties. While the definition of SME is unfortunately very narrow and many businesses may find that they do not fall within this definition, Revenue are willing to work with all businesses who are impacted by the current pandemic.
 
Businesses should take some comfort from Revenue’s recent statement on their long history of working very successfully with taxpayers to resolve their payments difficulties. The statement contains some key advice for businesses experiencing tax payment problems and can be accessed below:
 
As matters progress and develop, we envisage that further measures may be introduced. We will continue to keep this page updated with the latest developments in this area.

BDO Ireland is here to support you and your business through these unprecedented times. For any questions or assistance please contact your usual BDO tax contact or a member of our Tax team.