Paschal Donohoe (Dublin Central, Fine Gael) | Oireachtas source

Section 62 inserts a new section 28C into the Emergency Measures in the Public Interest (Covid-19) Act 2020 to provide for the warehousing of temporary wage subsidy overpayments received by employers which must be refunded to Revenue. Section 28 of the Act legislated for the TWSS introduced by the Government to provide financial support to workers affected by the Covid-19 crisis. The scheme enables employees whose employers are affected by the pandemic to receive significant supports directly from their employer through the payroll system. Section 28(9) of that Act provides that where the Revenue Commissioners have paid an employer a temporary wage subsidy for a specified employee and the employer did not pay that employee an additional amount equivalent to the temporary wage subsidy or was not entitled to receive a subsidy in respect of an employee, the employer is obliged to refund the subsidy to the Revenue Commissioners.

Revenue will shortly be conducting a reconciliation exercise on the TWSS. Arising from that exercise, it is expected that some employers who received a temporary wage subsidy will be required to refund amounts received in excess of their entitlement to Revenue. Under section 28(13) of the Emergency Measures in the Public Interest (Covid-19) Act 2020, employers will also incur interest on amounts of subsidy to be repaid at a rate of 8% per annum, calculated from the date on which the subsidy was received. This is the same rate that applies to underpayments of income tax. Notwithstanding that some employers were not entitled to receive certain TWSS payments or did not pass on TWSS payments received, it is recognised that the 8% interest rate is quite severe, not least in the current circumstances.

This section allows employers to warehouse overpayments due to be refunded to Revenue for a period of at least 12 months. No interest will be charged during this 12-month period, after which a reduced interest rate of approximately 3% per annum will apply until the Covid-19 relevant tax has been paid in full. The provision applies to businesses that, as a consequence of the impact of Covid-19 related restrictions, are unable to pay their Covid-19 relevant tax and have complied with PAYE obligations as well as obligations imposed on employers under the TWSS and EWSS. All small and medium-sized enterprises whose tax affairs are dealt with in Revenue’s business division or personal division qualify automatically. Other employers will qualify if they believe they cannot pay their Covid-19 relevant tax as a result of the effect on their business of Covid-19 and have notified Revenue of that opinion.

As with the tax debt warehousing for VAT and PAYE employer debts, the scheme has three periods. The first is the Covid-19 restricted trading phase, which commences on 26 March 2020, the first day of the "applicable period" for the TWSS, and runs to the end of the first full bimonthly VAT period after which the business has resumed trading. Period 2, the zero interest phase, runs for 12 months from the end of period 1 and may be extended by order of the Minister for Finance but can end not later than 31 December 2022. Period 3, the reduced interest phase, runs from the end of period 2 until the employer’s Covid-19 relevant tax is paid in full.

No interest will apply to Covid-19 relevant tax during periods 1 and 2 and a rate of 3% per annum will apply in period 3. Employers will be able to warehouse debts as long as they continue to file returns, make an agreement before the start of period 3 to repay the outstanding amounts of excess TWSS, and abide by that agreement. If they fail to do so, the normal interest rate of 8% per annum will be reimposed. The extension of the tax debt warehousing scheme to excess TWSS payments is a vital liquidity support to business. I commend this section to the House.