COVID-19: Assistance for Small and Medium Enterprises

Many small and medium enterprises (“SMEs”) are experiencing trading and cash flow issues arising from the COVID-19 crisis.  The Revenue Commissioners (“Revenue”) have defined an SME as a business with a turnover of less than three million euro who is not dealt with by either of Revenue’s large cases division or medium cases division.

Revenue has recently announced updated measures to assist all businesses experiencing tax payment difficulties and appreciates that such difficulties are causing increasing concern for businesses particularly in terms of their ability to keep their good tax compliance record on track.

Of particular note, Revenue has stated that it will not apply interest on late VAT returns from January and February 2020 due to SMEs experiencing cash flow challenges caused by COVID-19.  It has also suspended interest on late payments of employers PAYE liabilities during February and March 2020.

Key Advice – Engage Early

Revenue will engage with any viable business experiencing temporary cashflow difficulties, including difficulties arising from the COVID-19 outbreak.  Revenue works successfully with businesses that engage with them early to resolve their tax payment difficulties.  Revenue have stated however that the measures adopted do not amount to permission to defer payment of taxes and that SMEs should continue to send in their tax returns on time.

Affected businesses should take the following practical steps:

  • Continue to send in their tax returns on time and
  • Engage early with Revenue if you run into difficulty in paying your tax.

Measures Adopted

The following updated advices published by Revenue hope to further provide assistance and clarity to SMEs that are experiencing trading difficulties caused by the impacts of COVID-19:

  • Tax Returns: SMEs experiencing temporary cash flow difficulties should continue to send in tax returns on time;
  • Application of Interest: the application of interest on late payments is suspended for January / February VAT and both February and March PAYE (Employers) liabilities;
  • Debt Enforcement: all debt enforcement activity is suspended until further notice; and
  • Tax Clearance:  current tax clearance status will remain in place for all businesses over the coming months.

Information on the Importation of Goods

In customs, critical pharmaceutical products and medicines will be given a Customs ‘green routing’ in order to facilitate uninterrupted importation and supply.

Information for Subcontractors

Relevant Contract Tax (RCT) – The RCT rate review that was scheduled to take place in March 2020 is now suspended.

Ongoing Reviews

Revenue have stated that they will continue to monitor the evolving situation regarding the COVID-19 crisis, conducting ongoing reviews and will issue further updated guidance for all businesses when required and in advance of the March / April VAT returns, and other future returns due.

Criticism of Measures Implemented to Date

Many representative business associations across the country have called for further supports to be put in place due to the great impact that many SMEs and other businesses face during the COVID-19 outbreak.  In particular, many representative associations have sought a moratorium on VAT payments as well as a halving of employers PRSI.  They are further asking Irish banks to defer loan repayments for at least 6 months.  Many of these measures are being reviewed by the relevant sector and it is hoped that further supports are to be put in place to assist businesses.

How we can help

If you have any queries or concerns, or would like to discuss the above in further detail, please feel free to contact Jenna Man, in the Litigation & Dispute Resolution Department of BHSM on 01 440 8300 or jman@bhsm.ie for further information.

This article is for general information purposes. Legal advice must be obtained for individual circumstances. Whilst every effort has been made to ensure the accuracy of this article, no liability is accepted by the author for any inaccuracies.

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