We have now lived through the first 3 months of the Wage Subsidy and now its DECISION TIME…
…whether to remain in the Wage Subsidy Scheme or not?
On 29th June many of our clients could finally return to work. IT IS CRITICAL TO STATE THAT JUST BECAUSE YOU HAVE RETURNED TO WORK DOES NOT MEAN YOU HAVE TO LEAVE THE WSS. There has been a lot of talk and questioning by employees of our clients as to if it is legal to still be in the WSS while working – I can assure you, you can, and you, in turn, can assure your employees it is ok.
How do I decide if I should/can remain in the WSS?
The return to work will hopefully signal a return to your previous level of sales. As a result of this, it is critical that you carry out an evaluation of what you believe your level of sales will be over the next month and in particular August also.
Why? Because the current scheme is designed to run until 31st August. The most simple measure of whether you are allowed to continue to participate in the WSS is are your sales down by 25%. If your business has experienced “significant negative economic disruption” as a result of COVID-19, you may also avail of/stay in the WSS.
What does “significant negative economic disruption” mean – can your sales be down say 20% and still avail of the WSS? The answer is yes according to the Chairman of The Revenue Commissioners Niall Cody who elaborated on this on Morning Ireland on RTÉ Radio on 31st March last – listen to the Podcast for reassurance.
You need to document your reasons why you believe you are entitled to avail of the scheme – it may be that you are down on orders, down on budget, or that while your sales are not down 25%, your customers cannot pay you as they are so badly affected by COVID-19. There are multiple possible factors that may contribute to your personal decision.
Will my employees owe tax on the Wage Subsidy they have received?
The answer is that in most cases they will owe tax. In the most simple example, the tax due will be the value of the wage subsidy received by that person, multiplied by their rate of tax – which will either be 31% or 51%. Revenue have stated that when this figure is confirmed next January they will then allow the employee up to 2 years to repay this tax. You can expect a backlash from your staff on this – some employers have committed to pay a bonus to their staff to offset this tax liability.
We have worked the numbers on this and even if you do decide to pay this bonus, the saving to your business is still in the order of 25%.
We can confirm your company’s particular situation/saving for you if you wish for a small fee.
Revenue Checking Up
We have now lived through the first 3 months of the Wage Subsidy and the Revenue have commenced what is essentially an audit of the operation of the system, to check that anyone availing of it has done so legitimately and has implemented it correctly.
Revenue have stated that over 55,000 employers have availed of the subsidy, and starting this week will begin to contact each of those employers and ask them to provide information to confirm their claim is legitimate. I attach a sample of the letter each of you will receive in the next few days. Please do not panic when you receive it – it is only an enquiry, and it is a matter of replying with information so that Revenue can verify your claim is valid.
To reply to this enquiry, we need you to prepare a response to points 1 and 2 on Page 2 – we will provide the data requested for points 3 – 7. Revenue have given only 5 days to respond, so please contact us immediately on receipt of the email from Revenue, so we may prepare our element of the response. You should start preparing your answers now – don’t wait until receipt of the letter. In many cases, we here in Guardian will receive the email from Revenue before you, and should this occur we will confirm this to you and send you a copy.
We shall charge a small fee to assist you in this process as this you may appreciate, will take us time and is outside the scope of our agreed service.
Some Good News – Restart Grants
On a positive note, the full details of the Restart Grant have been confirmed. The Government announced in their plan released on 2nd May a grant for micro and small businesses based on a rates/waiver rebate from 2019.
In order to avail of this grant, you must have paid commercial rates in 2019, and if so you can apply for a minimum grant of €2,000 up to a maximum of €10,000.
The application is very straightforward – I completed ours in 15 minutes. To speed up the process you should have the following information ready:
- Your last rates bill – This is required to get your Customer number and Rate number.
- Your company registration number.
- Your address and Eircode.
- Bank account name, address and IBAN number.
- A scanned copy of your bank statement header – showing the company name, address and IBAN.
- Your Tax Clearance Access Number – if you don’t have access to ROS yourself please call us and we can get that for you.
You can access the form by logging on to: https://dbei.gov.ie/en/What-We-Do/Supports-for-SMEs/COVID-19-supports/COVID-19-Restart-Grant-Local-Authority-Websites.html
And then select the Local Authority in your area.