The recent Budget saw the announcement of the COVID Restrictions Support Scheme (CRSS), a welcome initiative to assist businesses that are closed because of COVID-19 restrictions. Finance Bill 2020 has now been published, together with Revenue guidance notes on the new scheme and, while the legislation is still subject to amendment this gives a clearer understanding of the finer details of CRSS.
Check if you are eligible for the scheme and calculate your weekly subsidy entitlement with our new CRSS calculator.
Additionally, the business must intend to reopen and resume trading once restrictions are lifted.
For a new business that commenced trading on or after 26 December 2019, the turnover test will be applied by reference to average weekly turnover in the period from 26 December 2019 to 12 October 2020.
In considering the turnover test, it is also the premises that must be considered. Therefore, for example, a company operating a number of different pubs, restaurants and hotels would consider each outlet individually; it may claim CRSS for those outlets that are subject to the relevant restrictions and whose turnover is at or below 25% of 2019 levels, but may not claim for any outlets that do not meet these two conditions.
Where an entity carries on several different activities at the one premises, only some of which qualify for CRSS, turnover should be apportioned between the activities on a just and reasonable basis and a claim made for those that do qualify. The maximum payment per premises will not however exceed €5,000 per week.
For example, say a retail business in Cork had turnover of €2.5 million in 2019 and has since 22 October 2020 been subject to Level 5 restrictions for an initial six-week period. Average weekly turnover for 2019 was €48,077; therefore, in order to apply for CRSS there must be a reasonable expectation that total turnover for the six-week period will be no more than €72,115, which works out at a weekly average of €12,019.
The maximum payment of €5,000 per week would therefore apply where a business had turnover of €4.16 million or more in 2019. A business with turnover above this level is not precluded from applying for CRSS but its payment will be capped at that level.
In our example above, the payment due to the business in Cork is calculated as follows:
Where the period of restrictions is extended, a further application may be made for the extended period. When the relevant restrictions are lifted, the entitlement to CRSS will cease.
Revenue have clarified that for businesses that were subject to restrictions under a number of different levels between 13 October 2020 and 22 October 2020 – for example the hospitality sector – a single claim for the entire period between 13 October 2020 and 1 December 2020 may be made. For any future restrictions however, separate claims must be made for each individual period.
In determining eligibility, there must be a “reasonable expectation” that the business will meet the conditions set out above and significant penalties may apply for an incorrect or invalid claim. It is therefore important that a business closely monitors the matter and withdraws from the scheme and repays any amounts received once it becomes apparent that it will not meet the conditions.
If a business concludes at the beginning of the restricted period that it will not meet the conditions but subsequently does, they may retrospectively apply for the scheme, but only if this application is made within eight weeks of the commencement of the restricted period.
Ultimately therefore, the payments may be subject to either income tax or corporation tax, but such liability will only become payable once the business is profitable again.