COVID Restrictions Support Scheme (CRSS) Overview and Examples

COVID Restrictions Support Scheme (CRSS) Overview and Examples

COVID Restrictions Support Scheme (“CRSS”) is an additional government support for businesses subject to significant Covid-19 restrictions. Set out below is information on how the scheme is intended to operate as well as some worked examples of the scheme provided by Revenue.

It is proposed that CRSS will be available to companies and self-employed individuals operating a business, profits from which are chargeable to tax under Case I of Schedule D. To qualify, the business must be operating from a premises wholly located in a region subject to restrictions under the Government’s plan for living with Covid-19 with the result that the business is required to prohibit or considerably restrict members of the public from accessing their business premises. Generally, the restrictions apply at Level 3, 4 or 5 of the Plan for Living with Covid-19 but, in the case of certain businesses could apply at lower levels of restrictions.

Where as a result of the restrictions, a business has been required to temporarily shut their premises or operate at significantly reduced levels, with the result that turnover for that period will be no more than 25%  of the average weekly turnover for a period equal to the same number of weeks in 2019 (or using 2020 turnover figures for new businesses), that business will qualify under the scheme. 

Qualifying taxpayers will be able to log on to ROS and register for CRSS as soon as possible. The registration process will include providing details such as the location of the business and average weekly turnover for 2019. The claims process will be available from mid-November. Once they have registered, a taxpayer will be able to make a claim for the period their business is restricted from operating. Revenue will publish guidelines on the registration process and on the operation of the scheme in due course. 

The relief will operate as a cash payment equal to 10% of the average weekly value of the 2019 business’s turnover up to €20,000 and 5% thereafter, subject to a maximum weekly payment of €5,000, for the same number of weeks as the restricted period. 

The payment is known as an “Advanced Credit for Trading Expenses” and is taken into account when computing the profits and gains of the business under Case I of Schedule D as a reduction against deductible trading expenses. However, the receipt of the payment will only result in additional tax where the business is in a profitable position for the chargeable period. 

The scheme will operate on a self-assessment basis and is conditional on the taxpayer continuing to file all tax returns on time, holding a current tax clearance certificate and on the intention to resume the business when the restrictions are lifted. Details of taxpayers availing of the scheme will be published on the Revenue website at a later time. The Scheme will run from 13 October 2020 until 31 March 2021. 

Examples

Example 1 – individual operates a pub in Dublin city

Mr. A has been running a pub (that does not serve food) in Dublin City for many years. In the year ended 31 December 2019, his turnover from the business was €663,000 (excluding VAT). His VAT returns are up to date and he has tax clearance. On 15 March 2020, he closed the pub to customers in line with Government restrictions. The pub has remained closed for business since that time.

As of 13 October 2020 (the date the CRSS was announced), Level 3 restrictions under the Living with Covid-19 Plan are in place for Co. Dublin and are expected to remain until 28 October. The Level 3 restrictions mean that the pub will have to remain closed until 28 October and, as a result, Mr. A expects that he will have no turnover in that same period.  Based on:

 a) the fact that official Covid restrictions are in place which prohibit customers from accessing the pub, requiring him to temporarily close his pub between 13 and 27 October, and

b) Mr. A’s reasonable expectation that he will have no turnover between 13 and 27 October, he is entitled to apply to Revenue for an Advance Credit for Trading Expenses (ACTE) for the period 13 to 27 October, which constitutes a claim period.

The amount of the ACTE that he is entitled to for this claim period will be calculated by reference to his turnover for 2019 and the number of full weeks that comprise the claim period, as follows:

Average weekly turnover 2019 €12,750 (i.e. €663,000 / 52) 10% of €12,750 €1,275

Number of full weeks 2 €1,275 X 2 ACTE is €2,550

 If the restrictions for Co. Dublin are extended, with the result his pub remains closed and the pub will have no turnover, he can make a subsequent claim for the extended period of restrictions, which will constitute a new claim period, and on making a further claim he will be entitled to a payment of €1,275 for every week of the new claim period.

Example 2 – company operating cafés in Letterkenny and Sligo town

 Yummy Nibbles DAC carries on a café trade operating from separate business premises, one is located in Letterkenny and the other is in Sligo town. Because the cafes are operated from separate business premises, they are treated as separate activities for the purposes of the CRSS.

Letterkenny café In the year ended 31 December 2019, turnover for the Letterkenny café was €195,000 (excluding VAT). As of 13 October (the date the CRSS was announced), Level 3 restrictions under the Living with Covid-19 Plan are in place for Co. Donegal and are increased to Level 4 with effect from 16 October 2020. The Level 4 restrictions are expected to stay in place until 10 November, at which point the situation will be reviewed by the Government. Under both Level 3 and Level 4 , the café may remain open only for take-away and delivery and outdoor dining or service up to a maximum of 15 people. However, the café has a thriving take-away service and recently set up a heated outdoor dining area that can accommodate up to 12 people at a time. As a result, Yummy Nibbles DAC expects that while turnover in restricted period will be reduced, it will not be less than 25% of four weeks of the average weekly turnover of 2019.

Sligo Town Café

In the year ended 31 December 2019, turnover for the Sligo town café was €221,260 (excluding VAT). As of 13 October 2020, Level 3 restrictions under the Living with Covid-19 Plan are in place for Co. Sligo and are expected to remain until 28 October. While the Level 3 restrictions are in place, the café will operate on a take-away only basis (it does not have an outdoor seating area). Yummy Nibbles DAC expects that in the 2-week period in which the Level 3 restrictions are in place, turnover will be approximately €1,400. This represents 16.45% of two weeks of the average weekly turnover for the café in 2019.

Yummy Nibbles DAC claim

Although both business premises from where the cafés operate are subject to Government restrictions, the company is not entitled to claim an ACTE in respect of the Letterkenny Café because turnover for the period during which the restrictions are in place will not be less than 25%  for the comparable period in 2019. However, Yummy Nibbles DAC is entitled to apply to Revenue for an ACTE in respect of the Sligo Café for the claim period 13 to 27 October. The amount of the ACTE that the company is entitled to for this claim period is calculated by reference to the Sligo town café’s turnover for 2019 and the number of full weeks that comprise the claim period, as follows:

Average weekly turnover 2019 €4,255 (i.e. €221,260 / 52) 10% of €4,255 €425.50

Number of full weeks 2 €425.50 X 2 ACTE is €851

If the restrictions for Co. Sligo are extended, Yummy Nibbles DAC can make a new claim for the extended period of restrictions, where the Sligo business continues to qualify. Yummy Nibbles DAC will be entitled to a payment of €425.50 for every week of the new claim period.

If it later transpires that the Letterkenny café did not do as well as had been expected, the company may then be entitled to apply for an ACTE, as long as a claim is made within 8 weeks of the commencement of the restricted period. Similarly, the company may be entitled to make a claim for an ACTE in respect of the Letterkenny café for a later period of restrictions. The company has filed VAT returns and has tax clearance.

Example 3 – Individual runs a dance studio in Co. Clare

Ms. Y runs a small dance studio from premises in Co. Clare, from which she teaches contemporary dance to groups of children and teenagers on a part-time basis. Her turnover in 2019 was €35,100 and she is not registered for VAT and will need to apply for tax clearance. As of 13 October (the date the CRSS was announced), Level 3 restrictions under the Living with Covid-19 Plan are in place for Co. Clare and are expected to remain until 28 October. As dance classes may not take place under Level 3, she cancels all classes for the two-week period in which the restrictions are in place and issues refunds to affected customers. As a result, she expects to have no turnover for the two-week period in which the restrictions are in place.

Based on the foregoing, she is entitled to apply to Revenue for an ACTE for the claim period, 13 to 27 October as follows:

Average weekly turnover 2019 €675 (i.e. €35,100 / 52) 10% of €675 €67.50

Number of full weeks 2 €67.50 X 2 ACTE is €135

If the restrictions for Co. Clare are extended, Ms. Y can make a new claim for the extended period of restrictions, where her business continues to qualify. She will be entitled to a payment of €67.50 for every week of the new claim period.

Platinum Xero Partners

Platinum Xero Partners

We are pleased to announce that Lalor O’Shea McQuillan are now recognised as Platinum Xero Partners. This is the highest level of partnership available with Xero, the leaders in Cloud Accounting technology.  

We obtained platinum status due to the high percentage of clients who have migrated to Xero and because a large number of our fully qualified and experienced accountants are now certified Xero users.

Innovation Continues at Lalor O’Shea McQuillan

As you know, we were the first accountancy firm to introduce online accounting to Ireland. Since then, we constantly seek to provide cutting-edge solutions to our clients and Xero products help us to provide that exceptional service.

If you haven’t already made the move, the Xero cloud accounting platform will provide you with the tools you need to manage the financial aspects of your business leaving you with more time to focus on growth.

Keep Connected To Us and Your Cash Flow

With live financial data hosted securely in the cloud, the Xero app gives you 24/7 access to your accounts from anywhere. Because Xero keeps both you and us – your accountant – connected to your live financial data, it greatly enhances the services we can provide to you.

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  • Automated bank feeds. Data from your sales, income and purchases can flow straight from your bank to your books so you don’t have to spend hours balancing them.
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Budget Highlights 2021

Budget Highlights 2021

INCOME TAX

  • An increase in the Earned Income Credit from €1,500 to €1,650
  • An increase in the Dependent Relative Credit from €70 to €245
  • Extension of the Sea-going Naval Personnel Tax Credit to 31 December 2021 and to increase it to €1,500 for 2021 (from €1,270 in 2020). 
  • €203 increase to the 2% USC rate band ceiling to €20,687
  • The reduced rate of USC for medical card holders is being extended for a further year.

ADDITIONAL TAX MEASURES

  • Temporary Reduction of VAT for Tourism and Hospitality items from 13.5% to 9% from 1 November 2020.
  • Increase in the Farmers Flat Rate Addition from 5.4% to 5.6% 
  • Revised balancing charge rules on capital allowances for intangibles with effect from 14 October
  • From 1 January 2021 the weekly income threshold for the higher rate of employers PRSI will increase from €394 to €398.

MEASURES TO SUPPORT ENTERPRISE/ SMEs/ AGRI- SECTOR

  • Expansion of Warehousing of tax liabilities to include repayments of Temporary Wage Subsidy Scheme funds owed by employers.
  • Extension of Warehousing of tax liabilities for the adversely affected self-employed to include the 2019 balance and 2020 preliminary tax to allow such taxpayers to defer payment for a period of a year with no interest applying.  A 3 per cent interest rate will apply thereafter and will attract no surcharge.
  • EWSS will continue in some form throughout 2021.
  • The Film Tax Credit Regional Uplift scheme is being extended by one year by inserting an additional year of uplift at the rate of 5% in 2021. 
  • Amendment of CGT Entrepreneurial Relief so that an individual who has owned at least 5 per cent of the shares for a continuous period of any three years qualifies for this relief. Previously, a person had to own at least 5 per cent for a continuous period of 3 years in the 5 years immediately prior to the disposal. 
  • Farm Consolidation Stamp Duty Relief extended in its present format until 31 December 2022 
  • Consanguinity (Stamp Duty) Relief extended in its present format until 31 December 2023 
  • Housing Residential Development (Stamp Duty) Refund Scheme Extension from 31 December 2021 to 31 December 2022 with minor amendments.
  • There is a two year extension of the Knowledge Development Box to 31/12/2022

COVID RESTRICTIONS SUPPORT SCHEME (CRSS)

  • This scheme is designed to assist those businesses whose trade has been significantly impacted or temporarily closed as a result of the restrictions as set out in the Government’s ‘Living with Covid-19’ Plan. 
  • The scheme will generally operate when Level 3 or higher is in place and will cease when restrictions are lifted. The sectors impacted by the current Level 3 nationwide restrictions are accommodation, food and the arts, recreation and entertainment.
  • If the Government decides to move to a higher level of restriction then other sectors may qualify. 
  • For these businesses, the Government will make a payment, based on their 2019 average weekly turnover, to provide support at a difficult time. 
  • Qualifying businesses can apply to the Revenue Commissioners for a cash payment in respect of an advance credit for trading expenses for the period of the restrictions. The scheme will be effective from today, Budget Day, until 31st March 2021, and the first payments will be made to affected businesses by mid-November. 
  • Payments will be calculated on the basis of 10 per cent of the first €1 million in turnover and 5 per cent thereafter, based on average VAT exclusive turnover for 2019. It will be subject to a maximum weekly payment of €5,000.
  • The scheme will operate on a self-assessment basis and qualification will require a business to demonstrate that their turnover has been severely impacted; that is it may not exceed 20 per cent of the turnover for the corresponding period in 2019.

CLIMATE AND ENVIRONMENTAL MEASURES

  • Carbon Tax €7.50 Increase in Carbon Tax Rate 
  • Changes to Vehicle Registration Tax and to Motor Tax 
  • The Accelerated Capital Allowance scheme for Energy Efficient Equipment is being extended for three years to 31/12/2023