Covid Restrictions Support Scheme (CRSS)
The Covid Restrictions Support Scheme (CRSS) announced on Budget day provides targeted support to businesses that are forced to close temporarily or operate at a significantly reduced level because of COVID-19 public health restrictions that either prohibit, or significantly restrict, customers from accessing their business premises. Generally, this refers to COVID-19 restrictions at Level 3, 4 or 5 of the Government’s Plan for Living with COVID-19. Finance Bill 2020 outlines the details of CRSS. We have summarised the key features of the scheme in a FAQ below.
1. Who can qualify for the CRSS?
The scheme is available to affected self-employed individuals (sole traders or partners in a partnership) and companies who carry on a trade or trading activities, the profits from which are chargeable to tax under Case I of Schedule D (trading income) from a business premises located wholly within a geographical region for which COVID-19 restrictions are in operation.
A business will qualify under the scheme where, as a result of the COVID-19 restrictions, the business has been required to temporarily shut their premises or operate at significantly reduced levels and can demonstrate that turnover for that period (i.e. the claim period) will be no more than 25% of the average weekly turnover of the business in 2019 (or average weekly turnover in 2020 in the case of a new business). The business premises must be a building or a similar fixed physical structure from which a business activity is ordinarily carried on. Where customers acquire goods and services from a trade by attending more than one business premises, the trade carried on at each business premises is looked at separately in determining whether the conditions for the CRSS are met. The scheme also applies where customers do not attend a business premises. In these cases apportionment may be required on a “just and reasonable” basis where there is more than one business premises.
The claim period refers to the period in which the COVID-19 restrictions provided for in regulations made under sections 5 and 31A of the Health Act 1947, are in place. The legislation also provides for an extension period of the COVID-19 restrictions, where, in relation to a relevant geographical region, the COVID-19 restrictions in operation for that relevant geographical region are extended beyond the date on which they were provided for in regulations made under sections 5 and 31A of the Health Act 1947.
2. How much can a business claim under the scheme?
The support will be provided by way of an Advance Credit of Trading Expenses (ACTE) for an amount equal to 10% of the average weekly turnover of an affected business up to €20,000 and 5% thereafter, subject to a maximum weekly payment of €5,000, for each week that their business is affected by the COVID-19 restrictions.
In order to make a claim under the scheme a business must satisfy a number of other conditions in addition to the 25% ‘turnover test ‘above, including:
- Have an up to date tax clearance certificate in place.
- Comply with all VAT obligations.
- Register to claim the CRSS on ROS.
- Make a declaration on ROS that they satisfy the conditions to make a claim under section 485 Taxes Consolidation Act 1997.
Further details are provided below.
3. Can a new business formed in 2020 claim CRSS?
Yes, a new business formed in 2020 may claim an ACTE under the CRSS. The legislation provides that both an ‘established relevant business activity’, relating to a business activity that commenced before 26 December 2019, and a ‘new relevant business activity’, relating to a business activity that commenced on or after 26 December 2019 and before 13 October 2020, are entitled to make a claim under the scheme if they meet the qualifying conditions.
4. How do you calculate the amount of the CRSS claim?
In order to calculate the ACTE for the claim period, the business must firstly determine the average weekly turnover of the business in 2019 (or average weekly turnover from the date the business commenced to trade to 12 October 2020, if the business commenced on or after 26 December 2019). This is based on the VAT-exclusive turnover for 2019. The business is entitled to a cash payment of 10% of the average weekly turnover up to €20,000 and 5% thereafter, subject to a maximum weekly payment of €5,000, for the same number of weeks as the restricted period.
5. How can a business register for CRSS and submit a claim?
The business must register for the scheme on Revenue’s Online System (ROS). To register, the business must provide certain details that Revenue consider necessary and appropriate for the purposes of registration, including, the name, address and details and description of the business activity and the location where it is carried on. Once registered, the business must complete an electronic claim form to claim the ACTE and provide Revenue with the details of their claim. These details would include, for example, details of average weekly turnover (as explained in Question 4 above), the VAT paid and VAT exclusive turnover for 2019 and the percentage reduction in business turnover for the claim period and other particulars. The business must also submit a declaration for the claim period, stating that they satisfy the conditions of the scheme. Where COVID-19 restrictions for a geographical region are extended beyond the date on which they were due to expire, a new claim will be required for each extension period.
To avail of the scheme the business must have complied with their VAT obligations (i.e. have registered for VAT or filed VAT returns, as required). They must also be eligible for a tax clearance certificate throughout the COVID-19 restrictions period. In the case of temporarily closed businesses, the taxpayer must have the intention to resume the business activity once the restrictions that prohibit or restrict public access to the business premises are lifted.
We expect that Revenue will provide detailed Guidance on the operation of the CRSS and we will update this webpage with further details on the registration and claims process when the online facility goes live.
6. When can a business submit a claim under the scheme?
A claim in respect of the ACTE must be made no later than 8 weeks from the date the claim period commences (i.e. 13 October 2020).
7. How will the payment under the scheme be treated for tax purposes?
The ACTE payment is an advance of tax deductible business expenses. Therefore, when computing the taxable profits for the current accounting period or tax year, the amount of tax deductible expenses in the tax computation must be reduced by the amount of the ACTE payment received. The ACTE will not otherwise be included in computing the taxable profits or gains for the current period.
8. What happens if a business submits a claim that it is not entitled to?
Where a company makes a claim for a period and it subsequently transpires that it was not permitted to make the claim under the scheme rules and the company has not repaid the amount claimed, the company will be liable to tax on an amount equal to four times of the amount of the claim that the company was not entitled to claim. The tax will be assessed under Case IV of Schedule D and the company will not be entitled to offset any loss, expense or credit etc against this amount. Interest will also apply from the first date of the claim period.
Where an individual makes a claim that he/she is not entitled to which has not been repaid to Revenue, the individual will be liable to tax at the standard rate on five times of the amount of the claim that was not permitted (the “unauthorised amount”). This unauthorised amount shall be liable to tax under Case IV of Schedule D. No tax deduction or credit can be applied to reduce the tax due on this amount. In cases where an individual makes an invalid claim or overclaims ACTE interest will also apply.
9. How long is the duration of the scheme?
The scheme is due to expire on 31 March 2021. However, the Finance Bill gives the Minister for Finance authority to monitor and superintend the administration of the scheme and to vary it by Ministerial Order. The Minister can extend the scheme beyond 31 March 2021 but to no later than 31 December 2021.
10. Where can I find further information on CRSS?
Section 11 of Finance Bill 2020 contains details of the measure. We understand that Revenue will be issuing Guidance on the CRSS and we will make this available on this webpage once published.