The Government has announced a further suite of measures to support small, medium and larger business that are negatively impacted by Covid-19, details of which are set out below:
‘Warehousing’ of COVID-19 Related Tax Debt and additional Government supports for Business
Legislation is to be introduced to permit Revenue to ‘warehouse’ VAT and Payroll tax debt that arose on foot of the COVID-19 related restrictions. While the finer details of this ‘warehousing’ measure have still to be worked out, Revenue has confirmed the following:
- COVID-19 related VAT and Payroll tax debts, due from 1 March 2020 to the date when sectoral restrictions are lifted, will be parked for a period of 12 months from recommencement of trading, during which time no debt enforcement action will be taken by Revenue
- no interest will accrue on the tax debts during the 12 month period
- thereafter, the COVID-19 related tax debts will carry a reduced interest rate of 3% (down from 10%) until the debt is paid
- the timeframe allowed to pay the ‘warehoused’ debt will be flexible and determined by the ability of the business to pay both COVID-19 related debts as well as meeting its ongoing tax liabilities as they arise in the normal course. Prior to the expiry of the warehousing period, the business will be expected to engage with Revenue to reach an agreement on an exit strategy more suited to the specific business needs and the need for continued viability.
- for the warehousing arrangement to apply, all returns must be filed in accordance with the Revenue guidance that has applied since the start of the current pandemic. For continued qualification by businesses for these arrangements, it will be a prerequisite that the businesses remain compliant with all their return filing and tax payment obligations in respect of tax periods that postdate the periods covered by the warehoused debt.
The scheme will apply to businesses in all sectors of the economy who have been negatively impacted by COVID-19.
SME Credit Supports
A €2 billion COVID-19 Credit Guarantee Scheme to provide an 80% guarantee on lending to SMEs until the end of this year, for terms between 3 months and 6 years. SMEs will be able to go directly to the banks in the Scheme, and the guarantee can be used for a wide range of lending products between €10,000 and €1 million that have a maximum term of 6 years or less. It will be available to all SME sectors, including primary producers.
Interest rates will be below current market rates.
It is a further development of the existing Credit Guarantee Scheme which is already available from AIB, BOI and Ulster Bank and it will be possible for other lenders to get access to the Scheme.
Implementing this scheme will require legislation, the drafting of which has been approved by Government. In parallel with the drafting of the legislation and its passage through the Houses of the Oireachtas, the Department of Business, Enterprise and Innovation, the Department of Agriculture, Food and the Marine, the Departments of Finance and Public Expenditure and Reform, and the Strategic Banking Corporation of Ireland will work to put in place arrangements to ensure that the Scheme can be implemented as soon as possible after the enactment of the legislation.
Provision of a Restart Fund for micro and small businesses through rebates/ waivers of commercial rate
This fund will operate through a system of rebates/waivers of commercial rates payments from 2019. It is intended that companies will receive a total amount equivalent to no more than their 2019 rates bill and that there will be a cap per business of €10,000. This fund is to act as a further targeted support to small and micro enterprises that have been impacted by COVID-19 to assist these businesses in reconnecting with the market, their employees and their customers. Details of the scheme will be worked on by the Department of Public Expenditure and Reform in consultation with the Departments of Business, Enterprise and Innovation and Housing, Planning and Local Government and finalised in the coming weeks.
A three month commercial rates waiver for businesses that have forced to close
In March the government deferred rate payments for a three month period for the hospitality, retail, leisure and childcare sectors. Local Authorities will now engage directly with individual ratepayers with a view to waive commercial rates for a three month period beginning on 27 March 2020 for businesses that have been forced to close due to public health requirements.
Ireland Strategic Investment Fund – Pandemic Stabilisation and Recovery Fund
The Ireland Strategic Investment Fund (ISIF) is to establish a sub-portfolio within ISIF called the Pandemic Stabilisation and Recovery Fund which will invest up to €2 billion of ISIF’s readily available capital in medium and large enterprises (more than €50 million in annual revenue or more than 250 employees) to assist them meet the challenge of COVID-19. It will complement ISIF’s extensive work to date within its existing portfolio of over 100 investments of €2.7 billion invested capital to mitigate the impact of COVID-19.
The ISIF Pandemic Stabilisation and Recovery Fund will mirror the approach of ISIF’s existing and proven investment strategy:
- the fund will act as an accelerator, investing on a commercial basis in businesses that can meet the investment requirements and can use ISIF investment to return to long-term viability
- investments can be across the range of instruments from senior debt, hybrid instruments to equity, and can be tailored to take account of the particular circumstances of each investee. This will enable businesses to access the capital they need in the most appropriate form that best suits their individual circumstances
- in making investments, ISIF will seek to maximise the quantum of additional capital that the investee business can access from its existing shareholders and banks, from potential new co-investors and from European sources (such as the European Investment Bank), thereby minimising the amount of ISIF capital that may be needed.
Further details are available on the ISIF website.
If you have any questions or need further information on any of the above, please contact Lalor O’Shea McQuillan for assistance.