tax and legal

Registration opened for the Employment Wage Subsidy Scheme

Registration for the Employment Wage Subsidy Scheme (EWSS) opened, yesterday, 18 August 2020 for eligible employers. The scheme will replace the Temporary Wage Subsidy Scheme (TWSS) in two weeks’ time, on 1 September 2020. The scheme is to operate until 31 March 2021.

Employers who wish to avail of the EWSS and who meet the eligibility conditions should register now. Once registered employers may claim EWSS from the next payroll run onwards. Revenue’s guidelines on the operation of the scheme tell us that registration cannot be backdated and must be completed before the first pay date in respect of which EWSS is being claimed.

Tax clearance

One of the key requirements of the EWSS is that employers have a valid tax clearance certificate. This was not a condition of the TWSS.

Tax clearance is essentially confirmation from Revenue that the employer is fully tax compliant in relation to filing of tax returns and payment of taxes under all tax heads. The tax affairs of persons connected with the employer will also be taken into account. Tax clearance must be maintained by the employer for the duration of the scheme.

Employers who have COVID-19 related tax debts which are included in the Revenue Debt Warehouse scheme, or non-COVID-19 debts which are included in a phased payment arrangement (PPA), will still qualify for tax clearance.

Employers who do not hold a valid tax clearance certificate should apply for one now. An application for tax clearance must be done online through the Revenue Online Service (ROS).

Eligibility

In addition to having tax clearance, employers must be able to demonstrate a 30% reduction in turnover or customer orders and the disruption to the business is caused by COVID-19. Turnover includes all sources of trade income specifically including sales, donations, State funding etc., but excludes the EWSS subsidy.

The EWSS will be administered on a ‘self-assessment’ basis and Revenue will not seek proof of eligibility at the registration stage. However, Revenue will seek proof at a later stage based on risk criteria.

Self-review

A review must be undertaken on the last day of every month and deregistration, if relevant, should take place with effect from 1st of the following month. Should an unexpected event during a month trigger the employer to believe they will no longer be eligible for the scheme (e.g. unexpected large customer order or grant), they should de-register immediately mid-month.

Where an employer has opted out of the scheme but determines they meet the eligibility criteria in a subsequent month, they can opt back into the scheme. However, the claim will not be back dated to the ‘opt-out’ months.

Change to excluded employees

Although all proprietary directors are excluded in the EWSS legislation, Revenue have confirmed that EWSS can be claimed for certain proprietary directors. Further guidance is expected from Revenue.

Certain connected parties and employees not employed as part of the business, such as domestic employees, are also excluded from the scheme.

How the scheme will work

Current Revenue guidance tells us that the scheme should work as follows:

  • EWSS will re-establish the normal requirement to operate PAYE and normal PRSI on all payments made to employees;
  • EWSS can only be claimed in respect of payroll submissions of at least a monthly pay frequency (quarterly, yearly, bi-monthly submissions, for example, will not be processed);
  • gross pay is as reported on the payroll submission and includes notional pay (e.g. BIK) and is before the deduction of pension contributions and salary sacrifice;
  • to indicate that a subsidy is being requested for an eligible employee, the employer must include ‘EWSS’ as the payment type in the ‘Other Payments’ section on the payroll submission and input €0 or €0.01 (this will depend on the payroll software);
  • employees should not include the EWSS ‘Other Payment’ details on the payslip they provide to employees;
  • Revenue will conduct a month end review based on the payroll submitted and post a statement to ROS inbox by 5th of the following month to confirm the subsidy due – payment will be made once a month as soon as practicable after 14th of the following month;
  • payroll submissions should be processed using normal PRSI classes (not Class J9);
  • employers PRSI will apply at the normal higher rates, as appropriate. Once the payroll has been submitted via ROS, Revenue will undertake a review overnight on the return due date of 14th of the following month to determine the correct employers PRSI due based on the 0.5% rate. A ‘credit’ due to the employer will be calculated and posted to reduce the PAYE liability due and payable for that month; and
  • ahere an employee has more than one employment, each employment is viewed on a standalone basis and each employer is entitled to claim the subsidy due.

‘Sweepback’ – July/August 2020

A subsidy may be claimed for eligible employees for the period 1 July 2020 to 31 August 2020. This will be completed via a ‘sweepback’ mechanism using a template provided by Revenue which we expect to be available late August 2020.

There is a deadline of 5 September 2020 to apply for the ‘sweepback’ provision.

Revenue will endeavour to pay the subsidy due as soon as practicable after 14 September.

Register now

Registration for the EWSS is available now on Revenue Online Service under the Manage Tax Registrations service.

To avail of the scheme, timely registration, holding a valid tax clearance certificate and meeting the eligibility conditions should be top of the list of actions for employers.

Learn more

Contact your Grant Thornton adviser now to discuss how we will assist you to avail of the subsidy under the EWSS.

Details of our webinar on 4 September on this topic will follow in the coming days.

Subscribe button.jpg