The Covid-19 pandemic is causing uncertainty and disruption around the world. Mazars priorities...
Accounting for the pandemic
Autumn is a busy time of year for tax practices and Frank Greene says certain work on transactions/reorganisations has been put on hold. “We have spent a lot of time supporting clients on the wage subsidy schemes and dealing with tax debts. This is likely to continue into next year,” says Greene.
The main issue that has arisen with the TWSS is the fact that employees will have Income Tax liabilities on the subsidy that will have to be paid in future years. Clarity is needed for situations where an employer agrees to fully or partially pay the tax liability, as the payment of a tax liability of an employee can give rise to a further benefit, and employers will be reluctant to, in essence, pay the tax twice.
Many businesses in hospitality and retail will likely be using the new EWSS out of financial necessity. All business owners should look at their financial position currently — and over the next 12 months — to see whether they are likely to satisfy the criteria to obtain the subsidy. The economy is still in a fragile situation and this is likely to continue over the next six to 12 months.
Warehousing tax debt
Companies wishing to warehouse tax debts should ensure that all their tax returns have filed, before working out how much and when they pay. While the 3% interest rate is welcome, the normal rate of 8/10% is out of kilter with other countries and needs to be permanently reduced.
Self-employed Tax relief
The 2019 tax return will need to be filed in November 2020. Individuals should be preparing that now and seeing what liability/refund they have for 2019, as well as looking at the loss scheme to either get an offset against tax or obtain a refund as soon as possible. We encourage anybody impacted to contact their taxadviser/accountant for guidance.
It is likely that businesses will need longer-term forbearance on tax debts, continued wage subsidies and the ability to raise funding through bank supported loans. And also, most likely, an expansion of the EIIS scheme to all sectors of the economy for a period of time.
This first appeared in Business Plus magazine in September 2020.