Engage early with Revenue so you can focus on your business in the Jurassic economy
Tom Maguire | Business Post Coumn
This column is all about tax but I hope you’ll allow me commence this one with a personal note and a suggestion. On St Patrick’s day, the Taoiseach rightly said “Not all superheroes wear capes, some wear scrubs and gowns”. A week later, we saw the Dail and this nation stop what they were doing to applaud healthcare workers on the frontline who care for the infected. We watched as Eileen Dunne finished her news bulletin summing up succinctly how we all felt with “Ladies and Gentlemen, we salute you”.
That was Thursday 26th March. When this virus goes the way of the dinosaurs, and it will, then that day should go down in history as the day we declared in one voice that we would not go quietly into the night. My suggestion: Each year on March 26th the Government of the day, whoever they may be, should recall all those who fought against this invisible enemy as well as the fallen. As has been said many times now: Never did so many ask so much of so few.
Back to tax. In my last column I spoke of our economy going toe to toe with a velociraptor and that those operating in it would have to regroup when the virus follows such creatures into extinction. Since then we saw the passing of the Emergency Measures in the Public Interest (Covid-19) Act 2020 into legislation. This was done as many have said at “breakneck speed” in that it was initiated on March 24th and was signed into law by the President on Friday March 27th. This was complex law which would normally take months of analysis and debate before it would become legal. The Minister for Finance said as part of the Committee Stage debate of the Bill that “The truth of it is that we were moving so quickly in putting all of this together that the legislation itself only took shape over the weekend and as we moved into Monday” and the bill was initiated on the Tuesday and was made legal by Friday. Let that sink in for a second.
That Act contained the legislation behind the temporary wage subsidy scheme. That wasn’t really a tax measure but a means of getting cash into people’s hands fast with the Revenue Commissioners being called front and centre to get that job done. He explained at the Seanad on Friday 27th March that “If nothing else, the Revenue Commissioners will tonight become an institution of the State that pays people, which shows the kind and speed of change that is happening”. Talk about an “about face” in the application of law but emergency times demand emergency measures and we were not found wanting.
But tax still has to feature in any solution to the Jurassic economic problem. In my last column, I spoke about measures taken by Revenue for Small and Medium Enterprises (SMEs) to include not charging interest on late payments of certain tax. This applied to businesses with turnover of less than €3 million who were not dealt with by either Revenue’s Large Cases Division or Medium Enterprises Division.
Further clarifications were brought about ranging from compliance with certain reporting and tax filing obligations, to residence in Ireland for tax purposes, to Benefits in Kind, to Corporation Tax and presence in the State or outside the State resulting from COVID-related travel restrictions. All of this was done quickly. Bringing some certainty of application in a Jurassic economy is to be welcomed and all such confirmations are available on Revenue’s website so that anybody, anywhere can read and rely on them accordingly.
Revenue have also confirmed that they would continue to prioritise the approval and processing of repayments and refunds, primarily VAT repayments and Professional Services Withholding Tax (PSWT) refunds to taxpayers. Further, where checks are necessary to allow repayment/refund claims, Revenue will conduct these through its website or by telephone. The prioritisation of cash over process is welcome given the need for euros to quickly swash around the economy.
Revenue make the point in their guidance that it works with taxpayers to resolve their tax payment difficulties. It continues that “While taxpayers are advised to pay tax liabilities if at all possible, we recognise that tax payment difficulties are an inevitable impact of the COVID-19 pandemic”. It explains that it is “important that businesses, who may be facing difficulty in paying their taxes for the first time, know that we will work with them to resolve their tax payment difficulties. With early and meaningful engagement, we can generally agree payment arrangements that are acceptable to both the business and Revenue”.
And that’s where phased payment comes in as it’s important that businesses understand the assistance available to them. Revenue explains that it will assist in dealing with tax payment difficulties by agreeing to Phased Payment Arrangements in appropriate cases. Of course there are various Ts and Cs that such businesses must comply with. It wouldn’t be tax otherwise. For example, the liabilities must be fully quantified, with “early, positive and honest engagement” by the taxpayer. Further, all Phased Payments Arrangements must include a minimum down-payment of 25% or 40% (where tax clearance is required) of the total liability outstanding i.e. Tax Interest and Penalties.
All data showing the viability of the business and, in relevant cases, the capacity to meet the terms of a payment plan together with ongoing compliance in relation to future tax liabilities, will be taken into consideration. A Phased Payment Arrangement application cannot be initiated by a taxpayer who has outstanding tax returns as all applications need to address the total liability, i.e. all outstanding tax, full interest and any outstanding penalties.
So the taxpayer has work to do in getting ready for such an application. However, Revenue say in their publication that caseworkers will respond to these applications within 10 working days, therefore caseworkers and managers should deal with all applications as quickly as possible. Speed is key here on both sides in arranging such settlements so that all concerned can focus on meeting their business needs.
You can see the focus of all of the above is to have cash swash around the economy as quickly as possible and this is to be welcomed. This is where theory meets reality but the key point is that you make the necessary arrangements with Revenue as soon as possible so that you can focus on your business and let tax take care of tax.
Please note this article first featured in the Business Post on 5 April and was re-published kindly with their permission on our website.