Fergus O'Dowd (Louth, Fine Gael)
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59. To ask the Minister for Finance if the operation of the stay and spend incentive will be reviewed in view of the impact of successive lockdowns on the scheme, which has good potential; and if he will make a statement on the matter. [1696/21]

Paschal Donohoe (Dublin Central, Fine Gael)
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The purpose of the Stay and Spend Tax Credit scheme is to provide targeted support to businesses within the hospitality sector whose operations are likely to be most affected by continued restrictions on public health grounds. Under the relevant legislation, the scheme is due to expire at the end of next month.

Since 1 October 2020, a total of 59,172 receipts have been uploaded to the Revenue Receipts Tracker, as at 25 March 2021. The related expenditure recorded on these receipts amounts to €9,722,399, and the potential tax cost is €1,944,480, assuming all such expenditure is claimed and qualifies in full for tax relief. As at 25 March, 3,145 service providers have registered for the scheme.

The scheme was developed at a time when there appeared to be a steady downward trend in infection rates and there was an expectation that the re-opening of the economy could be sustained uninterrupted. Unfortunately, this has not been the case and, with the exception of some short periods, public health restrictions have had the effect of impeding the operation of the incentive as originally envisaged.

Decisions on next steps relating to the scheme have yet to be taken. However, I would make the point that Stay and Spend should not be viewed in isolation from the other significant measures put in place to support businesses generally, including the hospitality sector.

In recognition of the unprecedented challenges facing the Hospitality and Tourism sector, the VAT rate was reduced from 13.5% to 9% from 1 November 2020. This is a temporary but important measure to provide support to the sector, where many businesses remain closed for now and those that are open are operating at significantly reduced capacity. It will apply until 31 December 2021. It should be noted that this VAT rate reduction came after the introduction of the Stay and Spend Tax Credit and reflects the fact that the latter was not intended to be the sole sector-specific support for hospitality.

Also, the Employment Wage Subsidy Scheme (EWSS) continues to be a key component of the Government’s response to the COVID-19 crisis to support viable firms and encourage employment in the hospitality and tourism sector and beyond. I have been clear that there will be no cliff-edge to the EWSS and, as announced by Government last month, the scheme is being extended in its enhanced form to the end of June 2021.

The Covid Restrictions Support Scheme (CRSS) is a targeted support for businesses significantly impacted by restrictions introduced by the Government under public health regulations to combat the effects of the COVID-19 pandemic. The support is available to companies, self-employed individuals and partnerships who carry on a trade or trading activities, the profits from which are chargeable to tax under Case I of Schedule D, from a business premises located in a region subject to restrictions introduced in line with the Living with COVID-19 Plan.

Businesses may also be eligible under the Debt Warehousing Scheme to ‘park’ certain VAT and PAYE (Employer) liabilities, excess payments received under the Temporary Wage Subsidy Scheme (TWSS), outstanding balances of self-assessed Income Tax for 2019 and Preliminary Tax for 2020.

Paschal Donohoe (Dublin Central, Fine Gael)
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I propose to take Questions Nos. 62 and 68 together.

The legislative basis for the Covid Restrictions Support Scheme (CRSS) is provided by Section 11 of the Finance Act 2020 and is available to companies, self-employed individuals and partnerships who carry on a trade or trading activities the profits of which are chargeable to tax under Case 1 of Schedule D.

A qualifying business must operate from a premises located in a region that is subject to restrictions introduced in line with the Government’s Living with COVID-19 Plan and must be required to either prohibit or significantly restrict customers access (to the premises) to purchase goods or services. Also, for the period of restrictions, the turnover of the business must not exceed 25% of its average weekly turnover in 2019 (2020 in the case of a new business). For the purposes of the scheme, a business premises is defined as a building or other similar fixed physical structure from which a business activity is ordinarily carried on.

The most common reasons for businesses leaving the scheme include circumstances where they no longer meet the turnover test due to changes in trading operations, for example moving to an online or takeaway service, or where they opt not to renew lease agreements on their premises. During March (to date), eleven businesses deregistered from the CRSS.

Revenue has also confirmed that 21,600 businesses had registered for the CRSS in respect of 23,900 premises by 25 March 2021 and almost €407 million had been paid to date. Of these, 640 businesses are located in Limerick and have received over €14 million in payments since the scheme commenced.

Revenue has published detailed statistics on the main COVID-19 subsidy schemes since late March 2020, including the Temporary Wage Subsidy Scheme (TWSS), the Employment Wage Subsidy Scheme (EWSS) and the Covid Restrictions Support Scheme (CRSS). These statistics are available on the Revenue website and are updated on a weekly basis.

Paul Murphy (Dublin South West, RISE)
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63. To ask the Minister for Finance the amounts due to be returned from employers for overpayments of the temporary wage subsidy scheme and employment wage subsidy scheme; the manner in which this will be carried out; and if he will make a statement on the matter. [17209/21]

Paschal Donohoe (Dublin Central, Fine Gael)
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The Temporary Wage Subsidy (TWSS) was in place between 26 March and 31 August 2020 and was introduced as an emergency income support for employees of vulnerable firms whose businesses had been negatively impacted by COVID restrictions and whose turnover had reduced by at least 25% during Q2 while the strictest public health measures were in place. The support was paid via the employer so as to maintain employment links between the employee and employer insofar as was possible and, to that end, the rate of Employers' PRSI was also significantly reduced to 0.5%. The level of income given to each individual employee was based on previous wages received in January and February 2020. Over 66,500 employers received a subsidy under the TWSS with payments worth just under €2.9 billion paid out to a total of 664,000 workers.

The TWSS amounts due to be returned from employers (reconciliation balances) arise primarily due to the rapid introduction of the scheme as an emergency response to the Covid-19 pandemic in early 2020. For the initial ‘transitional phase’ from 26 March to 3 May 2020, Revenue operated a simplified process so that employers could be supported as quickly as possible and, as an interim measure, paid employers the maximum subsidy amount of €410 per week in respect of each employee. Revenue provided extensive guidance on how to calculate the correct subsidy amount due and employers made a declaration that they would return any overpayments. Most of the balances now repayable relate to this phase rather than the ‘operational phase, which ran from 4 May 2020 to 31 August 2020.

Revenue has recently completed the reconciliation between the TWSS subsidy amounts paid to employers in respect of their employees and the actual amounts correctly due and paid to them. From the initial analysis, 41% of employers are in a balanced position, 3% of employers are due additional subsidy payments totalling €1.4m and 56% of employers have reconciliation balances to be repaid, totalling €224 million. Of this sum, approximately €90 million has already been repaid.

Revenue has at this stage notified most employers of their TWSS balance, other than a small number of more complex cases where calculations are still being finalised. Revenue appreciates that employers will wish to review these figures and ensure that all payments to their employees have been correctly reported. To facilitate these reviews, a period of three months, to end June 2021, is available to examine the data, make any necessary amendments and repay any amounts owing at that point, thereby finalising the reconciliation process.

Any reconciliation balance owing at end June 2021 may be paid to Revenue in similar manner to a tax liability. However, to ensure that these liabilities do not cause undue hardship to businesses at this difficult time, I introduced measures in the Finance Act 2020 to extend the Tax Debt Warehousing provisions to include any amounts owing in respect of TWSS. Employers not in a position to avail of Tax Debt Warehousing may request a phased payment arrangement from Revenue. Where employers do not avail of the opportunity to finalise matters by end June, Revenue will consider the current reconciliation balance as owing and will collect the outstanding amounts.

This is a historic issue as the TWSS was replaced by the Employment Wage Subsidy Scheme (EWSS) from 1 September 2020. The EWSS operates differently to the TWSS and is not included in the reconciliation process.