REVENUE RESPONSE TO COVID-19
|An SME, as defined by Revenue for tax purposes, is a business with turnover of less than €3 million who is not dealt with by either Revenue’s Large Cases Division or Medium Enterprises Division.
These relief measures recognise the cash flow difficulties SME businesses may now find themselves in and includes benefits and payments for both employers and employees.
VAT and PAYE
Revenue has confirmed that they will work with taxpayers to resolve payment difficulties and has asked that any affected businesses, not limited to just SMEs, take the following proactive steps:
Following on from this advice, Revenue has also announced the following relieving measures, with immediate effect:
While these measures are welcome, a greater challenge may lie in the ability to pay PAYE/PRSI liabilities. Apart from these being monthly payments, these represent fixed liabilities which need to be made if staff are to be paid and retained.
VAT returns should be less problematic given their link to turnover, although any expense decisions will now need to be carefully taken in these unprecedented times.
In further recognition that late tax payments are a distinct possibility, Revenue has confirmed that the current tax clearance status will remain in place for all businesses over the coming months.
The planned RCT (Relevant Contracts Tax) review scheduled to take place in March 2020 is suspended. RCT is a withholding tax that applies to certain payments by principal contractors to subcontractors in the construction, forestry and meat-processing industries. The rates of tax are 0%, 20% and 35%. The review was designed to assess the current rate applicable to each subcontractor in the eRCT system and determine whether a different rate should apply.
The suspension will allow lower rates of RCT to be withheld in cases where a higher rate should in fact be due.
In the case of subcontractors, existing rates will continue for now. Subcontractors can opt to ‘self-review’ within the eRCT system where they can check their current rate and apply for a reduced RCT rate.