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Spotlight: The EWSS and what you need to know

Covid-19 has left its mark on almost every industry imaginable. Across Ireland, the effects of the pandemic have reaped havoc on profits, turnover and the day to day running of organisations. Last week, we outlined a variety of government supports that were available for businesses in Ireland at this time. This week however, we’re going to cast a spotlight on the EWSS in further detail. Due to reduced turnover in businesses across the nation, employers have been finding it increasingly difficult to pay employees. While many employers might be aware that the EWSS exists, the jargon and criteria for eligibility might be throwing a spanner in the works.

The supports you’re entitled to do not have to be confusing, so we’re here to lay it out in a streamlined manner.

Here’s key information that you should know about the EWSS:

What is the EWSS?

For anyone who might not know, the EWSS stands for the Employment Wage Subsidy Scheme. Under the July Jobs Stimulus Package, the Employment Wage Subsidy Scheme replaced the Temporary Wage Subsidy Scheme from the 1st of September 2020.

Under the EWSS scheme, employers and new firms in industries that have been affected by Covid-19 whose turnover has fallen by 30% will receive a flat rate subsidy per week. This will be based on the number of qualifying employees on the payroll. It is noteworthy that this will include seasonal staff and new employees.

If an employee has more than one job, each employer in question can make a claim under the EWSS ignoring any other employments which the employee may have.

The EWSS does not affect any legal obligations that the employer may have to their employees regarding the terms, conditions, or entitlements, including pay. So that is something worth noting.

What guidelines need to be followed in order to be eligible for the EWSS?

Turnover:

In order to be deemed eligible to participate in the EWSS, an employer must be able to demonstrate to the satisfaction of the Revenue that, their business has been significantly disrupted by COVID-19. An employer’s eligibility to make an EWSS claim from 1 January 2021 will be based on demonstrating that due to Covid-19, at least a 30% reduction in their business turnover of customer orders will occur in the period from 1 January 2021 to 30 June 2021 by reference to the period from 1 January 2019 to June 2019. Childcare businesses registered in accordance with the Child Care Act 1991 are not required to meet the reduction in turnover / customers orders test. Employers are still required to undertake a review on the last day of every month to ensure they continue to meet the eligibility criteria for the EWSS.

In a case where business operations have commenced after 1 November 2019, the employer must be able to demonstrate that the turnover or customer orders during the period of 1 July to 31 December 2020 will be at least 30% less than what the turnover or customer orders would have been had there been no disruption caused by COVID-19.

The EWSS subsidy rates that will prevail until 31 March 2021 are as follows:

 

Gross Weekly Pay

Revised rates

Less than €151.50

Nil

€151.50 – €202.99

€203

€203-€299.99

€250

€300-€399.99

€300

€400-€1,462

€350

Over €1462

Nil

 

Tax clearance:

Employers who wish to avail of the EWSS must possess an up to date Tax Clearance Cert and they must maintain this tax clearance for the duration of the scheme in order to receive the payment.

Tax clearance will be granted if the tax affairs of the applicant and their connected partners are up to date.

The connected parties for tax clearance purposes include, business partners, partnerships, directors or shareholders of a company, previous business entity (where the applicant is succeeding to the licenced trade) or a VAT group remitter.

If there are outstanding returns or debts for the applicant or any of their connected parties, tax clearance will be refused by Revenue. Hence, it is pivotal that all tax returns are filed, and payments are made to cover outstanding debts.  At Cronin and Co we can walk you through the tax clearance process and ensure that you are in the best possible position ahead of applying for the EWSS.

Debt warehousing:

The Government has legislated to allow for debt associated with the COVID-19 crisis to be deferred or ‘warehoused’. The debt warehousing scheme allows for the deferral of unpaid VAT and PAYE debts arising from the pandemic for a period of 12 months after a business resumes trading (in accordance with the government guidelines). The debts can then be addressed by way of a phased payment arrangement at a lower interest rate of 3% per annum which represents a significant reduction from the standard rate of 8% or 10% per annum depending on the particular tax owed.

The period covered by the debt warehousing scheme is the period in which the business was unable to trade due to the Covid-19 pandemic, this scheme will include two months after the business has resumed trading.

It is important to note that businesses with COVID-19 related tax debts which are warehoused, or non-COVID-19 debts which are included in a phased payment arrangement (PPA), qualify for tax clearance, despite having these debts. Accordingly, businesses with warehoused debts or debts covered by a PPA can obtain Tax Clearance and, provided all other conditions are met, can participate in the EWSS.

How can Cronin and Co help you?

At Cronin and Co, our professionals are experts in what they do, we can help to prepare you and your financial documents ahead of applying for the EWSS. We will walk you through the process to ensure that you are availing of the Government Supports which your business is eligible for.

For any questions or queries please reach out to Lesley at Cronin and Co. [email protected]

 

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