COVID-19 Temporary Wage Subsidy Scheme update - Crowe Ireland

Extension and updates to the Temporary Wage Subsidy Scheme

COVID-19 Temporary Wage Subsidy Scheme update - Crowe Ireland

The Temporary Wage Subsidy Scheme (TWSS), introduced in March 2020, was initially intended to run for a 12-week period, ending on 18 June 2020 but has now been extended to 31 August 2020. In light of the extension to the scheme, Revenue has issued an eBrief outlining some of the recent updates and developments, which include:

  • Confirmation that the extension will not alter the current operation of the scheme
  • Clarification of the application of the eligibility criteria following the extension
  • Guidance on how employers who no longer require the TWSS support can exit the scheme
  • Details of common issues that have arisen relating to operational aspects of the scheme
  • Confirmation of the incorporation of apprentices, who were on an apprenticeship training and education programme with SOLAS, into the TWSS
  • An update on the notification of Week 1 RPNs (Revenue Payroll Notification) to employers in respect of employees in receipt of subsidies under the scheme
  • Details of a new facility in MyAccount for employees to review how much wage subsidy their employer has reported in their payroll submissions
  • Details of Revenue’s TWSS compliance programme

Eligibility to participate in the Temporary Wage Subsidy Scheme

The criteria to continue participating in the TWSS, or to join the scheme, remain unchanged. A business must have suffered a significant negative economic impact as a result of the COVID-19 pandemic. The indicators of this are a minimum of a 25% reduction in turnover, customer orders or any other ‘reasonable basis’ for the three months to 30 June 2020. Details of the eligibility criteria are available on Revenue’s website.

When most businesses initially joined the scheme they made their best estimate in regards their eligibility. It is now evident, at the end of Quarter 2, whether a business did in fact meet the eligibility criteria. If a business did not meet the eligibility criteria but had reasonable grounds for assuming it would, Revenue has stated that it should immediately cease claiming the subsidy for the extended scheme. Revenue will require evidence of the assumptions supporting the original self-assessment of eligibility and, once the basis is reasonable, will not seek to claw-back the subsidy paid for the original period. 

Employers who believe they do not meet the eligibility criteria or who no longer wish to avail of the TWSS, should cease returning J9 PRSI Class payroll submissions to Revenue. Employers should also inform Revenue via MyEnquiries of their intention to exit the scheme and ensure the employee J9 PRSI Class is reverted on future payroll submissions for each employee to their normal PRSI class. 

Calculation of the subsidy per employee

There has been no change in the basis of calculation of the subsidy amount for the extended period. The wage subsidy rates remain as follows:
  • Where the eligible employee’s Average Revenue Net Weekly Pay (ARNWP) does not exceed €412, a subsidy of 85% of ARNWP, to a maximum of €350, is applicable
  • Where the ARNWP is more than €412, but not more than €500, a subsidy of €350 is applicable.
  • Where the ARNWP is more than €500, but not more than €586, a subsidy of 70% of ARNWP is applicable to a maximum of €410
  • Where the eligible employee’s ARNWP is greater than €586 but not more than €960 and the employee’s current gross pay per week, as reported in the payroll submission, is: 
    • not more than 60% of the ARNWP, a subsidy of €350 is applicable
    • more than 60% and not more than 80% of the ARNWP, a subsidy of €205 is applicable
    • more than 80% of the ARNWP, no subsidy is payable and J9 PRSI class should not be applied
  • Where an employee’s ARNWP is more than €960, and where their current gross pay is below €960 per week and this represents:
    • not more than 60% of the ARNWP, a subsidy of up to €350 is applicable
    • more than 60% and not more than 80% of the ARNWP, a subsidy of €205 is applicable
    • more than 80% of the ARNWP, no subsidy is payable and J9 PRSI class should not be applied

Revenue has calculated employees’ ARNWP as well as the maximum weekly wage subsidy applicable and maximum weekly employer pay before tapering in respect of each employee’s active employments. They provide this information for download in the Employer ‘CSV file’.  

Revenue has confirmed that the subsidy amounts paid to some employees earning in excess €586 per week has been underpaid due to the interaction of gross and net pay. They are developing a solution whereby the underpaid subsidy amount will be calculated and paid directly to the employees affected towards the end of July 2020.

Common issues in relation to operational aspects of the scheme

The majority of TWSS payroll submissions are processed for refunds the day after they are received by Revenue. However, in some cases there are submissions where no refund has issued. The main issues that have arisen resulting in no refund being issued include:
  • The refund has been processed but cannot be paid to the employer as there are no bank details available to make the refund. Once bank details are updated on ROS any pending refunds will issue the following day
  • PRSI Class of J9 was not used in the payroll submission claiming TWSS refund
  • A previous line item correction was used to update a non J9 submission to a J9 submission
  • The employer created additional employments where there are no qualifying payroll submissions and then made the J9 submissions under these new employment IDs
  • The employer made a J9 submission without rehiring the employee correctly
  • The employer is entering the subsidy figure in Gross Pay
  • The level of payment made by the employer has reduced the subsidy to Nil
  • The subsidy paid to the employee does not correspond with the employee’s Average Revenue Net Weekly Pay (ARNWP), the Maximum Weekly Wage Subsidy or the tapered value

Employers are advised to review their processes and the ARNWP for each eligible employee along with other subsidy data provided by Revenue in the Employer ‘CSV’ file. Revenue is reminding employers not to amend or re-submit any TWSS payroll submission as this may result in further delays in the processing of refunds.

Week 1 basis 

Although payments made to employees under the TWSS are liable to income tax and USC, the subsidy is not being taxed in real-time through the PAYE system and instead will be calculated as part of the employee end of year review. To mitigate the impact on the employee end of year review, Revenue has placed all employees that have received payments under the TWSS (or the Pandemic Unemployment Payment) on a Week 1 basis.

Notifications have been sent to employers to operate the payroll on a Week 1 basis since 21 June 2020. Employers should download the most up to date RPN from ROS when running the payroll to ensure that employees are correctly switched to the Week 1 basis as soon as possible.

Employee subsidy information viewable in myAccount

Details of TWSS subsidy payments being made to employers on behalf of employees are now viewable in each employee’s Revenue record, which can be accessed via myAccount. Employees can view this information by accessing the ‘Manage your Tax 2020’ link on the ‘PAYE Services’ card in myAccount and select the ‘View’ link beside the relevant employment. The employee should click on the ‘View’ link next to any payroll submission they wish to see.

Where employees identify discrepancies between the TWSS amounts shown in myAccount and those provided by the employer, Revenue advises employees to firstly contact their employer to have the matter rectified. If it is not subsequently rectified to the employee’s satisfaction, they should contact Revenue directly via MyEnquiries under the category 'PAYE (Pay As You Earn) employee/pensioner - Other' and the subcategory 'Employee Payroll Reporting – Compliance.

Employees returning to work following a period of maternity or other related leave or, having been in receipt of Illness or other benefits paid by the DEASP

Revenue is reminding employers that that they can now claim wage subsidy in respect of employees returning to work following a period of maternity or other similar leave. Revenue has implemented a change to the TWSS to accommodate employees returning to work:
  • following a period of maternity, adoptive leave or related unpaid leave, or a period of paternity, parental or related unpaid leave
  • having been in receipt of health and safety or parent's benefit paid by the DEASP for February 2020
  • having been in receipt of illness benefit paid by the DEASP for February 2020

and may not have been on their employer’s payroll on 29 February 2020 or may not have been paid in January or February 2020. Details are available at the following link – eBrief 106/20.  

Apprentices returning to work

Revenue has implemented a change to the TWSS which will accommodate apprentices returning to work who, in February 2020, were on an apprenticeship education and training programme run by SOLAS and were not on their main employer’s payroll in February 2020. 

Employers wishing to access the TWSS subsidy on behalf of apprentices returning to work since 26 March 2020, should log on to ROS MyEnquiries, click ADD “A New Enquiry” and select the category “Covid-19: Temporary Wage Subsidy”, subcategory: “TWSS - Apprentices”. Revenue will then manually calculate a net weekly pay for each apprentice concerned and will create a revised ‘CSV file’ for the employer.

For each apprentice returned to the payroll by the employer, Revenue will apply the scheme retrospectively to the date of return to employment, or, the date the employer joined the scheme, or 26 March 2020, whichever is the latest. For apprentices who were ceased from payroll and in receipt of the Pandemic Unemployment Payment, no retrospection to TWSS can apply. However, employers may rehire these apprentices and can operate TWSS to subsidise their pay.

Compliance programme

To ensure the TWSS is operating correctly, Revenue is conducting a programme of compliance checks on all employers availing of the scheme and will be contacting all employers to confirm that:
  • They meet the eligibility criteria;
  • Employees are receiving the correct amount of subsidy; and
  • The subsidy amount is being correctly recorded in employee payslips.

The compliance check programme will also address any identified issues in respect of the operation of Real Time PAYE (PMOD) by employers over 2019 and 2020 and will also provide an opportunity for employers to address any other outstanding tax issues. This will be of importance to employers who may intend to avail of the 'debt warehousing' scheme for employer PAYE and VAT liabilities incurred during the pandemic period as up-to-date compliance will be a pre-requisite in order to avail of that scheme.   

Letters will issue to employers and their agents, where relevant, mainly through the ROS Inbox. The programme is expected to last for several months. Revenue has stated that it is essential that employers respond promptly as failure to do so may lead to suspension of future payments.

If you require assistance in accessing these supports or with any challenges you currently face during this crisis, please contact a member of the tax team or your normal Crowe contact.

Grayson Buckley, Partner, Tax - Crowe Ireland
Grayson Buckley
Partner, Tax
John Byrne, Partner, Tax - Crowe Ireland
John Byrne
Partner, Tax
Lisa Kinsella, Partner, Tax - Crowe Ireland
Lisa Kinsella
Partner, Tax