On 9th July, the Revenue Commissioners updated their guidelines for the Employment Wage Subsidy Scheme (EWSS) for pay dates from 1 July 2021, click here to view the guidelines.
In brief, the EWSS support is available for Employers with a valid Tax Clearance Certificate, who can demonstrate that the Covid-19 Pandemic has disrupted their business as reflected by a reduction in their turnover or customer orders by at least 30%.
In respect of pay dates after 1st July, 2021, the eligibility criteria for the scheme is now calculated with reference to a 12 month period, as opposed to a 6 month period previously. In summary therefore, the reduction in turnover of 30% will be compared to 12 months in 2021 to 2019 (i.e. 1st January to 31st December 2019) where the business was in existence prior to 1st January 2019. Separate rules apply where the business commenced after 1st January, 2019 as follows:
- The date of commencement to 31st December 2019, where the business commenced trading between 1st January 2019 and 31st October 2019, or
- The projected turnover or orders for 1st January 2021 (or date of commencement if later) to 31st December 2021 where the business commenced after 1st November 2019.
The extension of the comparable period from 6 months to 12 months will allow businesses whose trade was severely impacted due to government restrictions in the first half of 2021, to potentially trade at higher levels for the second half of 2021 compared to 2019 and still avail of the scheme, assuming all other qualifying conditions are met.
Most importantly in the new Guidelines is a new requirement for employers to submit an online monthly Eligibility Review Form (ERF) on ROS. The initial submission, which will be used to establish eligibility for pay dates from 1 July, needs to be made between 21 - 30 July 2021. In this submission, employers must provide the following details:
- Actual VAT exclusive turnover or customer orders for 2019
- Actual VAT Exclusive turnover or customer orders for the January – June 2021 period
- Monthly projections for July to December 2021.
On the 15th of every subsequent month during the scheme’s operation, employers will be required to provide details of the actual results for the previous month and review the original projections provided, to ensure they remain valid. Therefore Employers availing of EWSS are required to conduct monthly rolling reviews of their eligibility for the scheme to ensure they remain valid. Where an employer is no longer satisfied that they meet the ‘30% reduction test’, the employer should de-register for EWSS with effect from the following day in order to cease the subsidy.
It should be noted that Subsidies correctly claimed in accordance with the terms and conditions of the scheme prior to de-registration will not be repayable. If however circumstances change the following month and the employer becomes eligible again, they can re-register and claim for pay dates from the date of re-registration. However, it is not possible to backdate the claim to include the period of de-registration, on the basis that it would have correctly reflected the employer’s expectation at that time. It is important to note that the failure to complete and submit the EWSS Eligibility Review Form that confirms the reduction in turnover/customer orders, and related declaration, will result in the employer’s EWSS claims being suspended. In addition, while childcare providers and businesses who commenced trading since 1st November 2019 follow different criteria, there is a requirement for these businesses to confirm on ROS, on a one off basis before 30thJuly, that they are exempt from the requirement to complete the monthly employer Eligibility Review Form.
The current rates of EWSS will remain in place until 30th September but will likely be subject to change from 1st October 2021. The current Subsidy rates, which remain unchanged from 20 October 2020, are as follows –
Finally, the scheme is administered on a Self-Assessment basis and the Revenue Commissioners are, in addition to carrying out normal compliance interventions, will now apply real time checks to ensure compliance of the scheme by cross-referencing claims against other data sources available to them.
To discuss the above in further detail, please contact our team on (01) 6440100 / (090) 6480600:
- Mairead O'Grady, Tax Partner
- Patrick Fannon, Senior Tax Manager