As part of Budget 2021, the Minister for Finance Pascal Donohoe T.D. (the "Minister") announced the introduction of the Covid Restrictions Support Scheme ("CRSS"), a measure aimed at supporting businesses subject to significant Covid-19 restrictions.  The stated intention is for the CRSS to be in addition to the supports currently provided to employers under the Employment Wage Subsidy Scheme.

Set out below is a high-level outline of how the CRSS is expected to operate based on guidance issued by Irish Revenue to date and the draft Finance Bill 2020 published on 22 October which, once enacted, will provide the necessary legislative footing for the CRSS.

Key Highlights

  •  The CRSS will be available to both companies and self-employed individuals operating a business which is carrying on a trade, and will run from 13 October 2020 to 31 March 2021 (with scope to extend the scheme until 31 December 2021 at the latest).
  •  Generally speaking, in order to qualify for the CRSS, a business must be subject to restrictions under Levels 3, 4 or 5 of the Irish Government's Resilience and Recovery 2020-2021: Plan for Living with Covid-19 such that the business is required to prohibit or considerably restrict the public from accessing its premises. However, in certain cases, businesses may be able to avail of the CRSS where lower levels of Covid-19 restrictions apply.
  •  In addition, VAT-exclusive turnover for the claim period must be no more than 25% of the average weekly turnover in 2019 (or average weekly turnover in 2020 in the case of new businesses) where the business has been required to temporarily shut its premises or operate at significantly reduced levels in order for the business to be eligible for the CRSS.
  •  Where the taxpayer operates from separate business premises, these will be treated as separate activities for the purposes of the CRSS.
  •  Additional conditions to avail of the scheme include the requirement for the taxpayer to continue submitting timely tax returns, comply with his/hers/its VAT obligations, hold a current tax clearance certificate and have an intention to resume business once the relevant Covid-19 restrictions are lifted.
  •  Relief under the CRSS will operate as a cash payment to the business equal to 10% of the average weekly value of the business' 2019 turnover up to ?20,000 and 5% thereafter, subject to a weekly payment of ?5,000. The scheme will operate for each week that the business is affected by the Covid-19 restrictions.
  •  Payments under the CRSS will constitute an 'Advanced Credit for Trading Expenses' which will reduce deductible trading expenses when computing the trading profits and gains of the business. This may result in additional tax where the business earns a profit in the relevant chargeable period.
  •  Where Covid-19 restrictions for a geographical area are extended, a new claim will be required for each extension period.

Next Steps

  • The CRSS will operate on a self-assessment basis. Qualifying taxpayers should register for the scheme via the Revenue Online Service ("ROS") with the claims process expected to be available from mid November 2020.
  •  Once registered, the business will need to complete and submit a claim form via ROS, together with certain details (such average weekly turnover in 2019 and the relevant claim period, and the percentage reduction in business turnover), as well as a declaration that the conditions of the CRSS are satisfied
  •  Additional guidelines from Irish Revenue in relation to the registration process and practical operation of the CRSS are expected shortly.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.