If your business has been impacted by the latest public health restrictions, it may qualify for the Covid Restriction Support Scheme (CRSS). Since the introduction of the scheme in October 2020, CRSS has played an integral role in providing financial assistance to businesses that have been crippled by the Pandemic.
In order to qualify for the CRSS scheme, the business must ensure that all of the qualifying conditions set out below are met:
- Customer access to the business premises must be prohibited or significantly curtailed as a direct result of the public health restrictions,
- When the restrictions are in place, there must be a 75% or greater reduction in turnover compared to the average 2019 income for the same number of weeks.
- The business must have a genuine intention of recommencing trading activities once the restrictions are lifted, and
- The business must hold a valid tax clearance certificate.
Financial Support Provided
A business that meets the relevant eligibility criteria will be able to make a claim to Revenue for a cash payment known as an Advance Credit for Trading Expenses (ACTE), which we will refer simply to as “credit”. The amount of the credit received will be based on the average weekly turnover for the business.
For the majority of businesses impacted by the restrictions, the weekly credit will be equal to:
- 10% of the average weekly turnover for 2019, up to a limit of €20,000, and
- 5% thereafter.
For example, if the average weekly turnover figure in 2019 was €25,000, then the maximum credit the business will be entitled to receive under the CRSS scheme is €2,250 (€20,000*10% + €5,000*5%).
The weekly credit is capped at €5,000. This payment will be provided for each week the business is impacted by the restrictions.
NB: If the business commenced trading on/ or after 26 December 2019, different rules will apply regarding the computation of the credit.
In addition, businesses that are subject to the latest set of restrictions that came into effect on 31 December 2020, (e.g. non-essential retail shops) will be entitled to a double payment of the credit for the weeks commencing 28 December 2020 and 04 January 2021.
For businesses that were impacted since 24 December 2020 (e.g. hairdressers, restaurants), a double payment may also be received for the week commencing 21 December 2020. However, the overall weekly credit is still subject to the €5,000 limit.
Furthermore, the advanced credit for trading expenses may also be claimed by a business in the week it recommences trading, subject to the relevant eligibility criteria being met.
Submitting a CRSS Claim
Qualifying businesses will be obliged to register for the scheme via the e-Registration system on ROS. As part of the registration process the claimant will be required to:
- provide specific financial information relating to the business
- sign a declaration that the qualifying conditions for the scheme have been met.
Once the registration process is completed, the business will be able to submit a claim via ROS. A new submission must be made in respect of each claim period.
NB: The commencement and cessation dates for each claim periods will differ depending on the nature of the business and prevailing public health restrictions. Therefore, we would encourage all businesses to liaise with their accountants/ tax advisors in advance of submitting any CRSS claims.
Furthermore, Revenue has specified that a CRSS application received eight weeks after the relevant claim period has commenced will not be accepted.
The Impact on taxable trading profits
The credit received by the business under the CRSS scheme will be treated as a reduction in what would otherwise be regarded as tax-deductible expenses (e.g. rent, insurance, etc). Therefore, indirectly, the credit should be regarded as a taxable receipt.
However, unless the business has a profit for the period, the advanced credit should not create any additional tax liabilities. If the business is loss-making, the advanced credit will reduce the level of trading losses that can be used to shelter future or prior year trading profits.
If you have questions on the CRSS scheme, eligibility, and assistance with claims, our team will be happy to provide more information. Please get in touch with us 021 486 1486 or info@MC2group.ie