TWSS Reconciliation – Important Update

One year after the introduction of the Temporary Wage Subsidy Scheme (TWSS), the Revenue reconciliation process is underway.  Revenue have now compared the total subsidy amounts paid to employees, against the total subsidy amounts paid to employers, to determine the amount of TWSS (if any) owed back to Revenue by employers.

All employers who availed of the TWSS will receive a Statement of Account in their ROS inbox on Monday 22nd March 2021. Employers will have until 30th June, 2021 to review their reconciliation and to accept the reconciliation or make corrections to  payslips, if necessary. If an employer accepts the reconciliation, they will either be paid any additional amount due to them by Revenue or be required to repay any amount that they owe to Revenue. One of the main reasons that employer’s may have to make a repayment to Revenue is because Revenue paid a fixed amount of €410 per employee during the initial period of the scheme rather than paying the actual amount due.

If an employer does not agree with a reconciliation they can submit an enquiry through My Enquiries in relation to same.  We will be checking the TWSS reconciliation for our payroll service clients and will be in contact shortly to advise you on this matter.  If we do not provide payroll services to you but you require assistance in relation to the TWSS Reconciliation please let us know.

VAT Rate Change

From 1 March 2021, the standard rate of VAT has increased to 23% from 21%. This is a reversal of the temporary reduction as part of Covid 19 measures back in September 2020. 

The standard VAT rate applies to a wide range of goods and services such as professional services, telecommunications and non- essential food stuff and represents circa 50% of transactions in Ireland. The temporary reduction in the standard rate did not impact supplies which qualify for a reduced VAT rate such as activities in the tourism and hospitality sector for example hotel meals and accommodation, hairdressing and construction works. 

As set out below, there are a number of factors to be taken into account in determining whether the 23% or 21 % VAT rate applies to a supply of goods or services:

Invoices

• In the case of transactions with other VAT registered persons, a person accounting for VAT on the sales or invoice basis must apply the VAT rate in force at the time they issue or are obliged to issue an invoice.
• Persons accounting for VAT on the cash receipts basis who are required to issue a VAT invoice to another VAT registered person should show the VAT rate which applies on the date of the supply, not on the date of receipt of payment.
• Goods or services which are actually supplied to consumers/unregistered persons from 1 March 2021 are taxable at the 23% rate.
• Goods or services supplied to unregistered persons during the period 01 September 2020  – 28 February 2021 are taxable at 21% even if they are invoiced after 1 March 2021

Credit Notes

• Any VAT credit note or debit note relating to a supply of goods or services which contains a VAT adjustment and which is issued to a VAT registered person, a public body or a business carrying on a VAT exempt activity should show VAT at the rate in force at the time the original invoice was issued.
• Any VAT credit note or debit note relating to a supply of goods or services to a consumer on or after the 1 September 2020 should show or include VAT at the rate in force at the time of the supply.

Advance Payments

If the goods or services are supplied on or after 1 March 2020, any advance payments, including deposits, received from VAT-registered persons can be categorised as follows:

• Suppliers who account for VAT on an invoice basis: the appropriate VAT rate is the rate in force at the time the invoice relating to the advance payment is issued, or ought to have been issued, whichever is the earlier.
• Suppliers who account for VAT on a cash receipts basis: the appropriate VAT rate is the rate in force at the time of the advance payment.
• An advance payment received from an unregistered person is subject to VAT by reference to the rate in force at the time of the advance payment.

Xero Emerging Firm of the Year 2021 Finalist

We are delighted to announce our nomination as one of just three finalists in the Xero Awards – Emerging Firm of the Year 2021. We are very much looking forward to the awards which will be held in March 2021.

You can watch the playback of the Awards Ceremony << here >>

There Was No Such Thing As Broadband When We Introduced Online Accounting To Ireland

John O’Shea, Partner

We were the first firm to introduce online accounting to Ireland and many of our clients made the transition to online accounting with us in 2005. Back then there was no such thing as broadband and since then, online accounting has changed dramatically.

Since the introduction of Xero within our own practice, we have actively encouraged existing clients who are using other online packages to move to Xero.

Xero suite of products enables us to provide tailored solutions and build upon the exceptional service our clients have come to expect from us.

With Xero you can expect ease of transference, ease of use and cost-effectiveness.

Dedicated Digital Champion To Support You

All our staff are Xero ambassadors. However at the forefront is our Digital Champion Hannah Boccaccio who raises awareness, supports clients and communicates the benefits of Xero to local industry. This means we can now provide in-house training and ongoing support for all new and existing Xero clients over the long-term.

If you haven’t yet made the switch to Xero or if you would like to know more about the Xero suite of products, please contact your accounts manager at Lalor O’Shea McQuillan.

Read Testimonials From Some of Our Clients Who Have Made the Switch

Portlaoise Gas & Oil Limited

The saying often goes “time is money”.

Prior to using Xero, I operated manual books and records. I would sit with my employees on a Friday and spend the morning preparing invoices for the post.

Now we don’t leave a job without sending the invoice. We complete the job, get the customers email address and send it there and then.

This frees me on a Friday to work with the tools rather than the pen. Xero has also greatly assisted cashflow management.

I can offer customers payment arrangements as I have total control over the credit management.

I also use Hubdoc for all purchase invoices. Most suppliers send me invoices by email and I just forward them to Hubdoc. With manual invoices, I just take a photo and upload it there and then. All of my accounting function is now done on the phone/ipad and during “work hours”. No late nights catching up on my accounts. My only regret is not implementing Xero years ago.

Glenn O Shaughnessy, Owner, Portlaoise Gas & Oil Limited

Patterson Butchers, Baltinglass

We love how easy it is to gather all the information required and keep it in one place. It’s simple to share it with our accountants and we get access to our year-end accounts so quickly’.

Diane Patterson, Patterson Butchers, Baltinglass, Co Wicklow

Watch Training Videos From Xero TV To Get Started With Xero

Click on the button below to access training videos from Xero to start using some of the great features inside Xero.

Xero Testimonials

Here are quotes from some of our clients on how Xero is supporting their businesses.

Portlaoise Gas & Oil Limited

The saying often goes “time is money”.

Prior to using Xero, I operated manual books and records. I would sit with my employees on a Friday and spend the morning preparing invoices for the post.

Now we don’t leave a job without sending the invoice. We complete the job, get the customers email address and send it there and then.

This frees me on a Friday to work with the tools rather than the pen. Xero has also greatly assisted cashflow management.

I can offer customers payment arrangements as I have total control over the credit management.

I also use Hubdoc for all purchase invoices. Most suppliers send me invoices by email and I just forward to Hubdoc while the manual ones I just take a photo and upload it there and then. All of my accounting function is now done on the phone/Ipad and during “work hours”. My only regret is not implementing Xero years ago.

Glenn O Shaughnessy, Owner, Portlaoise Gas & Oil Limited

Patterson Butchers, Baltinglass

We love how easy it is to gather all the information required into one place, share it with our accountants and have access to our year end accounts so quickly’.

Diane Patterson, Patterson Butchers, Baltinglass, Co Wicklow

VAT Rate Change from 13.5% to 9%

On Tuesday 13 October 2020 as part of Budget 2021 the Government announced additional measures to support businesses that have been worst hit by restrictions imposed during the pandemic. One of those measures was the change in the reduced rate of VAT.

From 1 November 2020, the VAT rate for the hospitality and tourism sector will decrease from 13.5% to 9% until 31 December 2021. This will also apply to various entertainment services such as admission to cinemas, theatres, museums, fairgrounds and amusement parks. VAT at 9% will also apply to hairdressing and certain printed materials such as brochures, maps and programmes.

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.