As part of our BKK practical help series, this fifth installment highlights changes in Revenue and some rules they have relaxed in relation to a variety of situations and while taxpayers are advised to pay tax liabilities if at all possible, Revenue do recognise that tax payment difficulties are an inevitable impact of this pandemic and want to assist taxpayers who are experiencing tax payment difficulties. Taxpayers should continue to file their tax returns, even if payment of the resulting liabilities is not possible. Among the areas where rules have been relaxed relate to SARP, rescinding of tax clearance certificates, application of Irish payroll to foreign employers, PAYE dispensation applications and PAYE exclusion orders, determinations of Tax Residence and BIK. Please click on the question(s) that is relevant to your query and you will be automatically brought to the answer below.
We continue to be here to help and really want to engage with and help you at this time. Please continue to speak with us.
Do you have an Income Tax Refund waiting for you ?
- Individuals who are due a refund can file their return to claim the refund now
- There are a myriad of reasons why a taxpayer may find themselves having overpaid Income Tax for 2019
- Please consider preparing and filing your Income Tax Return as soon as possible
- If a liability arises, this does not need to be paid until 12 November 2020 but the earlier you can quantify your tax liability the better you can plan for if
Filing Extensions and late Revenue payments update
- Filing of CT1 Corporation Tax returns for accounting periods ending June 2019 onwards (i.e. due by March 23, 2020 onwards) is suspended until further notice
- The charging of interest on late payments is suspended for February, March and April PAYE (Employers) liabilities
- Employers should continue to report their payroll details each month to ensure that the filed/deemed return is accurate
- The charging of interest on late payments is suspended for January/February and March/April VAT
- All Revenue’s debt enforcement activity is suspended until further notice
- For property owners who opted to pay their LPT for 2020 by Annual Debit or Single Debit Authority payment, the deduction date will change from 21 March 2020 to 21 May 2020
- Relevant Contract Tax (RCT) rate review scheduled to take place this month (March) is suspended
- The filing deadline for all 2019 share scheme returns is being extended from 31 March 2020 to 30 June 2020
- Payment of instalments of excess R&D credit is being expedited subject to appropriate checks
- Professional Services Withholding Tax (PSWT) interim refunds are being accelerated
Have you updated your Revenue account for –
- Amendments to or cancellation of monthly direct debit payment
- Have you updated/added a bank account for all refunds due (Note that this may only be set up for a Revenue payment situation)
Some Revenue changes worth noting
- Where a variable direct debit to Revenue fails due to insufficient funds, Revenue has suspended the process of issuing a further request for the payments until further notice
- Current tax clearance status will remain in place for all businesses over the coming months
- Special Assignee Relief Programme (SARP). The 90 day employer filing obligation, which is a requirement for an employee to be eligible to benefit from SARP relief, is extended for a further 60 days
- PAYE Dispensation Applications, Revenue will not strictly enforce the 30 day notification requirement for PAYE dispensations
- Revenue will not seek to enforce Irish payroll obligations for foreign employers in genuine cases where relocated temporarily to Ireland during the COVID-19 period and performs duties for his or her foreign employer while in Ireland
- Regarding employees who are working abroad for a foreign employer under an Irish contract of employment where a PAYE exclusion order is in place, the position will not be adversely impacted where the employee works more than 30 days in the State due to COVID-19
- Revenue advises that where a departure from Ireland is prevented due to COVID-19, Revenue will consider this “force majeure” for the purpose of establishing an individual’s tax residence position.
- There are no BIK implications for costs paid by employer for an integral employee’s holiday cancellations or taxis provided for employees for health and safety reasons, subject to conditions.
- Where an employer pays for a taxi to transport an employee to or from work due to health and safety concerns, BIK will not apply for the duration of the COVID-19 period only.
- A BIK will not arise where employers provide equipment such as laptops, printers, scanners and office furniture in order for employees to set up a working space in their homes
- Many employees are now working from home temporarily. Employees can make a claim for additional costs incurred wholly, exclusively and necessarily in the performance of their employment duties while working from home.
- Revenue will be prepared to disregard such presence in Ireland for corporation tax purposes for a company in relation to which the individual is an employee, director, service provider or agent
What is additional taxable payment under the Temporary Wage Subsidy Scheme?
- An employer can choose to make an additional payment to the employee to fully or partially make up the difference between the amount provided by the subsidy scheme and the employee’s normal Average Net Weekly Pay
- Such additional payments are regarded as gross pay and liable to Income Tax and USC
- If the employer makes an additional payment greater than the difference allowed by the scheme (i.e. the employee receives more than the Average Net Weekly Pay) then the subsidy value refundable to the employer will be reduced by this excess amount when the refund reconciliation is performed by Revenue in due course
Are payments made deductible against income tax or corporation tax?
- In computing the employer’s liability to income tax or corporation tax, as the case may be, the employer shall not be entitled to a deduction in respect of the temporary wage subsidy payment paid to an eligible employee under the scheme
How are non-statutory deductions Processed?
- Non-statutory payroll deductions, for example credit union and union fees, are normally deducted from net pay after tax
- As the intention of the scheme is to maintain the employees’ net income as close as possible to normal net income, and to ensure that the employee receives the full subsidy payment value, employers should not apply such deductions unless the value of the additional payment exceeds the value of the deductions
- In the case of LPT, as necessary, the employee can use Revenue’s MyAccount to choose a different payment method for their LPT deduction
Registering bank accounts for the Subsidy Scheme?
- IMPORTANT: ROS allows an employer to specify to Revenue the bank account to use for tax payments and the bank account to use for tax refunds
- Both of these can refer to the same bank account number
- This is done through My Enquiries on ROS
Must all my employees be affected to avail of the Temporary Wages Subsidy Scheme?
- Eligible employers can participate in the scheme in respect of any eligible employees on their payroll, including those on fulltime, reduced hours, rehired staff who were temporarily laid off, or staff temporarily laid off but retained on the payroll
- Other employees, that Are not eligible employees, are processed as normal without PRSI class J9 being applied
Are there age restrictions for eligible employees under the scheme?
- There is no age restriction for employees to be eligible and it includes those employees on fulltime, part-time, temporary and short-time work arrangements.
- An employee is not an eligible employee if: (a) their Average Net Weekly Wage exceeds €960, or (b) the sum of payments (subsidy plus any additional payment but excluding tax refunds) payable to the employee in the week being processed exceeds the Average Net Weekly Wage.
Can I correct submissions already made for COVID refund scheme?
- Once a submission is made to Revenue with a J9 PRSI class, it is extremely important to ensure that the payroll submission is not subsequently deleted or amended
- Instead a detailed message should be submitted to Revenue through myEnquiries seeking further instructions
What if my employee is due a refund of tax in the payroll?
- Where an employee is due a refund of Income Tax or USC based on the payroll being processed, this should be paid by the employer and Revenue will refund this to the employer along with the associated wage subsidy
- This refund of Income tax is made to the employee, in addition to the subsidy payment and any additional payment, and should not be included in the employer’s calculation of the allowable additional payment
What information should be on the payslip?
- In relation to an employee covered by the subsidy, the employer is obliged to show the amount of the subsidy on the employee’s payslip
- This should be labelled as “GovC19 WageSub” on the payslip
What is the difference between short-term lay-off and short-time?
- A temporary or short-term lay-off arises when part or all of a business needs to temporarily close and some or all employees are sent home
- The period during which the employee is absent from work for this reason is regarded as a lay-off
- The employer should give as much notice as possible beforehand and clearly indicate that the lay-off and lack of work is temporary
- A short-time working situation arises when an employer reduces an employee’s working hours or wages to less than half the normal weekly hours or wages because the employer is temporarily unable to provide work for the employee
- An employer needs to give as much notice as possible beforehand and clearly indicate to the employee that the short-time is temporary
We would advise that specific advice should be sought where necessary in relation to the coronavirus and leave entitlements, as the situation is changing daily.
What is a reduction in salary and can this be implemented for every employee?
- Some employers may decide to reduce salaries on a temporary basis instead of reducing working hours or implementing a lay-off
- Reduction in salaries can pose significant stresses for employees when trying to meet their financial commitments such as mortgage, rent, etc.
- When proposing this type of measure the employer needs to consult with the employee and be willing to answer their questions and address their concerns
- As with a lay-off or short-time, the key to success is to be consistent in your approach to reducing salaries, be open with your communication and confirm agreed changes and review date in writing
Can an employee claim redundancy if they are on lay-off or short-time for an extended period?
- The Redundancy Payment Acts state that in certain circumstances if an employee is laid off or put on short-time for more than 4 consecutive weeks or 6 or more weeks within a 13-week period of which not more than 3 are consecutive, they are entitled to notify their employer of intention to claim a statutory redundancy payment.
- Under the Emergency Measures in the Public Interest (COVID-19) Bill, employees are not able to claim redundancy during the emergency period if they are laid off or put on short-time work as a result of the COVID-19 pandemic. The emergency period set out in legislation is 13 March 2020 to 31 May 2020, however, this period may be extended. It is also expected that the Bill will be subject to amendment as it progresses through the legislative process.
What happens if an employee is medically required to self-isolate?
- An employee who is medically required to self-isolate and who can work from home may continue to work and be paid as normal
- Employees that are medically required to self-isolate and who cannot work from home can apply for Illness Benefit or Supplementary Welfare Allowance
- The normal requirements for applying for Illness Benefit and Supplementary Welfare Allowance have changed to help prevent the transmission of coronavirus. This means Illness Benefit can cover the first week of a COVID-19 diagnosis or medically required self-isolation and any subsequent weeks
- The personal rate of Illness Benefit for people affected by COVID-19 has increased to €350 per week. It will be paid for a maximum of 2 weeks where a person is medically required to self-isolate and for a maximum of 10 weeks if a person has been diagnosed with COVID-19
- Employers are not obliged to pay sick pay for employees although some employers may offer this as a benefit. At present there are no plans for the State to reimburse employers who pay sick pay
- The Government has also stated that self-employed people will be able to get either Illness Benefit or Supplementary Welfare Allowance
What happens if an employee cannot work from home as they are looking after their children/family members?
- At present there are no specific payments for people who cannot work because they are looking after children who are not in school/childcare
- The Government has asked employers to be as flexible as possible in allowing employees time off to look after their children or other members of their families
- Options for employers to consider her may include:
- Offering paid compassionate leave and extending the number of days
- Allowing employees to alter their working hours so that they can coordinate caring between them and their partner, or another person
- Allowing employees to rearrange holidays
- Considering other flexible options such as allowing employees to take paid time off and working that time back at a later stage
We are here to help and really want to engage with and help you at this time. Please continue to speak with us.