On 24 March 2020, the Government announced measures to provide financial support to workers affected by the COVID-19 crisis.
A key measure announced was the Wage Subsidy Scheme. This scheme is to be operated by Irish Revenue through the normal payroll of employers.
This note sets out the Revenue approach to confirming employer eligibility and examination of supporting proofs. The scheme is a significant investment by Government in supporting both employers and employees through a subsidy that will be paid in real-time, through payroll.
Revenue’s administration of the COVID-19 Temporary Wage Subsidy Scheme will operate initially on the basis of self-assessment and a declaration by the employer concerned.
Revenue expects businesses to be able to produce relevant supporting documentation when requested to do so, in any follow up verification by Revenue involving an examination of relevant business records where that is considered necessary.
COVID-19 Temporary Wage Subsidy Scheme Eligibility
The COVID-19 Temporary Wage Subsidy Scheme is available to employers across all sectors excluding the Public Service and Non-Commercial Semi-State Sector.
In order for an employer to qualify for the subsidy scheme they must self-declare to Revenue that they;
- are experiencing significant negative economic disruption due to Covid-19,
- are able to demonstrate, to the satisfaction of Revenue a minimum of 25% decline in turnover or customer orders, and
- an inability to pay normal wages and other normal outgoings fully.
Revenue accept this will be readily apparent, where some businesses and some sectors have had to close their premises, owing to the impact of public health advice on individual businesses in terms of restrictions on trade, physical distancing, the nature of essential and non-essential businesses.
The turnover period under review is Q2, 2020. Revenue accept the employer is best placed to determine the drop in turnover and may base this judgement on the decline in orders in March 2020, in comparison to February 2020, or the likely turnover for the quarter compared to Q1 or if appropriate Q2, 2019, or on any other basis that is reasonable.
In Revenue’s published guidance they have stated that an employer that has been hit by a significant decline in business but has strong cash reserves, that are not required to fund debt, will still qualify for the Scheme. In such case, the Government would expect the employer to continue to pay a significant proportion of the employees’ wages.
It should be noted that, in Revenue’s opinion, the declaration by the employer is not a declaration of insolvency. The declaration is simply a declaration which states that, based on reasonable projections, there will be, as a result of disruption to the business caused or to be caused by the Covid-19 pandemic, a decline of at least 25% in the future turnover of, or customer orders for, the business for the duration of the pandemic and that as a result the employer cannot pay normal wages and outgoings fully, but nonetheless wants to retain its employees on the payroll. We would note that this is just Revenue guidance and while useful it is not a legal opinion which may differ.
Revenue will not be looking for proof of qualification at this stage. Revenue may in future, based on risk criteria review eligibility. In this context employers should retain their evidence/basis for entering the Scheme.
Eligibility Supporting Proofs
In any check, Revenue will focus on the types of business records, having regard to the nature and scale of the business, that should normally be readily available for such a business.
Furthermore, where, for example, a business has negotiated forbearance measures with a financial institution, Revenue will not seek to duplicate the relevant information. The documentation from the financial institution will generally be adequate for verification purposes as evidence of financial disruption.
As stated already, the critical requirement is to be able to show significant negative economic disruption due to COVID-19. The evidence in that regard will contribute in large part to demonstration of compliance with the other criteria.
The proofs mentioned below are intended to be illustrative rather than exhaustive and Revenue is open to considering other relevant evidence as a reasonable demonstration of eligibility for the COVID-19 Temporary Wage Subsidy Scheme:
- If for some reason the decline in turnover was less than 25% the business should retain documentation supporting its rationale for believing that it would suffer such a decline.
- Copies of documentation submitted to a financial institution as part of the negotiation of forbearance measures with the financial institution.
- Copies of notifications or communications to employees or Trade Unions or staff representative bodies of salary/wage cuts implemented as a direct result of the COVID-19 pandemic.
- Copies of documentation that show that any cash reserves in the business that are required to fund debt that is equal or greater than the reserve amount.
- Evidence of reliance on the Government Credit Guarantee Scheme or overdraft facilities or other borrowings for capital purposes.
- In the case of start-up businesses, for example, evidence of a decline in investment by at least 25% arising from the COVID-19 crisis.
To emphasise, the examples listed are illustrative only and Revenue is open to considering other relevant evidence as a reasonable demonstration of eligibility for the COVID-19 Wage Subsidy Scheme.