Enhancements have been made to the Temporary Business Energy Support Scheme (TBESS), making it more attractive.
The TBESS was introduced to support businesses with increases in their electricity or natural gas costs. It was subject to much criticism at the outset, and take-up was poor due to the qualifying criteria to access claims being viewed as too stringent. The view of one general manager of a Dublin hotel was that many businesses might be eligible for only low levels of support. As a result of the criticisms made, enhancements were announced to the TBESS and have now been signed into law. Below is a summary of the changes made and a brief overview of the TBESS and how it works.
Summary of changes to the TBESS
Initially, the scheme was to operate from September 2022 to February 2023. The scheme is now extended to 31 July 2023.
The monthly limit on payments for claims periods from 1 March 2023 onwards has increased from €10,000 to €15,000 for businesses operating from a single location and €30,000 to €45,000 for businesses operating across multiple locations.
Energy costs were required to have increased by 50% over the same month in the prior year, and this is now reduced to 30%, so that now businesses carrying on a trading activity that have suffered at least a 30% increase in their energy costs over the same month in the prior year, looking on a month by month basis, should qualify for the scheme. The reduction to 30% is effective from 1 September 2022.
The amount of the claim, referred to as the Temporary Business Energy Payment (TBEP), was restricted to 40% of eligible costs, eligible costs being the increase in energy costs in the claim month over those for the same month in the prior year when the scheme was introduced. The TBEP that can now be claimed is increased to 50% from 1 March 2023.
A claim under the scheme can now be made, in respect of any month over the period from September 2022 to July 2023, until 30 September 2023.
Recap of main aspects of the TBESS
The TBESS is administered by Revenue and provides a cash payment to qualifying businesses. It is aimed at businesses carrying on a trade or profession that have experienced at least a 30% increase in energy costs over the prior year. Sporting bodies and charities carrying on a trading activity also qualify for the scheme, provided they meet the requirement of the 30% minimum increase in energy costs.
To make a claim under the TBESS, the business must be eligible for a tax clearance certificate throughout the claim period and have complied with their tax registration, payment and tax return filing obligations.
It is necessary to register for the TBESS on Revenue’s online system, ROS, and to provide information including:
Tax reference number.
Registered name of the business.
Address of the business.
MPRN reference numbers for electricity and GPRN reference numbers for gas.
The business must also complete a claim form on ROS and have made a declaration via ROS that the qualifying conditions are satisfied.
The business (including a charity or sporting body carrying on a trade and eligible to make a claim) must have either an active Corporation Tax or Income Tax registration to make a claim.
An income and corporation tax exemption is provided for charities in respect of the profits of a trade carried on by the charity, provided that it applies the profits solely to the purposes of the charity and either:
The trade is exercised during the actual carrying out of a primary purpose of the charity.
Beneficiaries of the charity mainly carry on the work concerning the trade.
An example given in the Irish Revenue Commissioners’ TBESS guidelines is outlined below (Example 6 from the Guidelines).
A charity in Cork works with people in the local community who have a disability.
The charity operates three shops, selling goods produced by people with a disability. The profits qualify for the charitable exemption. The charity also has a head office from which administrative activities of the charity are carried out. No trading activities are carried out at the head office.
The charity is an eligible business concerning the trading activities carried out by the charity. Electricity or gas costs incurred in the charity’s shops will qualify for the TBESS, provided the eligibility criteria are met. Per the guidelines, electricity or gas costs incurred in the head office will not qualify for support under the TBESS.
The activities of a sporting body that are usually regarded as trading in nature include:
The short-term hiring out of pitches by a sporting body or tennis courts by a tennis club.
The operation of a bar by a sporting body.
The operation of a café or restaurant by a sporting body.
Where the sporting body is engaged in a mix of trading and non-trading activities, it may be necessary to carry out an apportionment of energy costs between those relating to the trading activities and those unrelated.
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.
Mazars was delighted to participate in the 2023 annual tax advisors survey with the Business Plus, which was published in November. Frank Green, Head of Tax, responds to editor Nick Mulcahy’s questions.