Since it became apparent considerable extent to which the COVID-19 pandemic would affect personal and business life in Ireland, and indeed worldwide, Revenue has issued guidance and advice to taxpayers to assist those who are experiencing difficulties caused by the impacts of the COVID-19 virus.
Where employers are unable to pay PAYE, PRSI and USC liabilities due to the COVID-19 pandemic, Revenue has announced the following measures to assist taxpayers and employers who are experiencing tax payment difficulties:
The application of interest on late payments is suspended for all SME* businesses in respect of January/February VAT and both February and March PAYE (Employers) liabilities.
All debt enforcement activity is suspended until further notice.
Returns should be filed as usual.
Companies, other than SMEs, who are experiencing difficulties in paying their tax liabilities should contact the Collector-General’s office on (01) 7383663. Alternatively, these companies can engage directly with their branch contacts in Revenue’s Large Corporates Division or Medium Enterprises Division.
* For tax purposes, an SME is a business with a turnover of less than €3 million who is not dealt with by either Revenue’s Large Cases Division or Medium Enterprises Division. SME’s are managed from both a service and compliance standpoint by Revenue’s Business Division.
Revenue would like companies to know that they will work with them to resolve their tax payment difficulties. They are encouraging businesses to engage with them early to agree on payment arrangements that are acceptable to both the business and Revenue. For example, a company may opt to defer a payment in the phased arrangement or apply to suspend the phased payment arrangement for up to six months. Businesses can apply for a Phased Payment Arrangement by contacting the Collector-General’s office on (01) 738 3663 or by using Revenue’s Online Phased Payment Facility.
Medium Enterprises Division has confirmed that the suspension of interest on late payments applies equally to taxpayers dealt with by them. The template available here has been created by Medium Enterprises Division for completion and submission via my enquiries on advising Revenue of the circumstances behind the non-payment of tax liabilities. Bank statements supporting the current financial difficulties experienced with comparable bank statements covering the same period in the prior year should assist with the request to defer tax payment. An outline of the priorities earmarked for existing cash balances should also support.
Large Corporates Division advised that requests for deferral of tax payments should be accompanied by broadly similar information as for that covered by the template issued by Medium Enterprises Division.
When dealing with both Divisions in Revenue it is necessary to advise of the period over which deferral is requested and the proposal for payment of tax. In framing a response and due to the level of uncertainty being experienced across the economy a full deferral for a 6 to 8 period initially could be requested, with the comment that at the end of that period the cash position will be reviewed and we will then advise as to whether a further deferral might be necessary. In outlining proposals for payment, it could be mentioned that, at the end of the six to eight week period, on or about 23rd May, that Revenue will be advised as to when it is anticipated that payment might be possible and how payment might be made, whether in instalments over a proposed period or in full. In the event of continued uncertainly and low levels of cash reserves at that point, that can be stated, pushing out committing to any payment plan for a further six to eight weeks and to re-assess the position then.
A similar approach should be taken by taxpayers across tax heads including corporation tax where a company might be due to make preliminary payments of corporation tax either based on the prior year balance or estimates of the corporation tax liability for the current year. Due to dramatic drops in activity levels in many sectors, payment by reference to the prior year liability is likely to be more than current year liabilities. Due to the uncertainty currently, estimating profitability levels and corporation tax liabilities is difficult and unlikely to result in an accurate figure. These factors combined with the requirement to carefully manage cash flow so that businesses have the best chance of recovery following the crisis means that corporation tax payments should also be deferred for impacted businesses.
The essential point is to engage with Revenue about tax liabilities.
If you have any questions in relation to the above, or if you would like to discuss this topic further, please contact a member of the Mazars corporate tax team below: