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CONCERNS HAVE BEEN raised about Revenue Commissioners demanding the return of the temporary wage subsidy to companies that overestimated their losses during the pandemic.
The scheme was available to employers in all sectors who predicted they would make a minimum of 25% of the turnover due to the pandemic.
The plan was implemented in an attempt to keep staff on their payroll during the pandemic. The Taoiseach told the Dáil yesterday that more than 66,500 companies had taken advantage of the wage subsidy scheme, which maintained more than 664,000 jobs.
Seanad and Dáil have heard that companies that diversified have contacted politicians over concerns that they did a better-than-expected turnover, although they continue to make losses, and now face high reimbursement bills.
“It would be a cruel irony if returning the support received were the last nail in the coffin of this business, said Senator Sean Kyne, who called on the government to intervene.
Independent TD Seán Canney raised the matter with the Taoiseach regarding the temporary wage subsidy scheme.
25% minimum loss
“Now I have some cases where, when the Revenue Commissioners did some checks, they found that some of these companies did not fully meet the criteria in the sense that their turnover is supposed to be reduced by 25%.
“In several of these cases, when the companies made their projections, they had no business in March. They looked at all the options and looked at the plan that was in place. They decided that to keep employer and employee loyalty intact, they would opt for the temporary wage support scheme, “he said.
In one case, Canney said business owners took out an overdraft to seek other options to try to create businesses, which he did.
His online business grew substantially, leaving him in a position where instead of dropping 25% in turnover, it went down 17% or 18%.
“The upshot of all this is that when Revenue reviewed the company in recent weeks, it asked the company to reimburse all the temporary support to the wage subsidy scheme that it got,” he said.
“If this is the way we are doing business, we will put these small businesses out of business in no time. I ask the Taoiseach to look at this with the Finance Minister and consider how the Treasury seeks to recover this money, ”he told Micheál Martin.
Keeping the business going and the people employed
“These companies have never defaulted. The sole purpose of what they did was to keep their business going and keep their employees employed, but now they are being severely penalized for that. They do not seek anything for nothing; They are just looking perhaps for a gradual repayment of some nature because they still have a loss in their business, ”Canney said.
He said the tax agency appears to be trying to get the money back before the end of the year.
“I think this will make all small businesses cringe if they are trying to stay in business for the next year,” he said.
Kyne told the Seanad that the wage subsidy proved to be a lifeline for many businesses across the country and kept the workforce together.
Many companies adapted their work practices and changed their marketing strategies to survive, he said, adding that some companies in the artisanal and retail sector increased their online presence to boost business.
“As we come to the end of the year, Revenue is evaluating these businesses in the context of the wage subsidy scheme and for some it is proving to be a sobering experience as their hard work and change of direction has meant that the 25% reduction in the necessary invoicing has been slightly lost and, as a result, Revenues is demanding the return of the temporary financing of the wage subsidy, ”he said.
“My office has been contacted by a company whose business has been devastated by the previous closure. His store, which sells high-end products mainly for tourism, was closed and all of his artisans would have been laid off if not for the temporary wage subsidy scheme.
“However, in this case the couple fought back, borrowed money to establish an impressive online presence and worked day and night to reposition their business. They paid VAT to Income even though they could have stored the debt because they felt we were all in this together and wanted to pay their bills on time to the taxpayer.
“After an extremely stressful and costly year, when your business went through hard work and innovation, but survived, imagine your surprise to receive an Income lawsuit for the wage subsidy scheme to be reimbursed. That’s € 30,000 that they don’t have because their billing dropped about 20%, not the 25% threshold, ”Kyne said.
He said that Income initially stated that if the original self-assessment was reasonable, it would not seek to recover the subsidy for the original period.
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“The couple fought tooth and nail to maintain their business, injecting borrowed money into it, and now they are being penalized for their hard work,” he said.
There must be flexibility in the way in which the recovery of the temporary wage subsidy scheme is carried out and the extraordinary efforts that entrepreneurs put into keeping their businesses open must be taken into account.
The Taoiseach assured the Dail that “there is no tactic or strategy to try to recoup income or anything like that.”
“That is not prompting any action by the Revenue Commissioners at all,” he added.
Companies had to demonstrate a 25% reduction in business volume during the second period of 2020 to qualify for the program, indicating that such statements are subject to compliance controls by the Treasury to ensure that the considerable sums delivered to the Employers within the framework of the program are in accordance with the provisions of the legislation.
That said, the Taoiseach said the initiative was taken by the employer, “who was probably not in a position to predict how well the online part of the business would do and is now in trouble.”
The Taoiseach promised to speak with the Minister of Finance on the matter, who in turn will raise the matter with the Treasury in relation to evaluating the scheme and knowing the frequency with which these business cases are presented.
Canney said the small businesses did everything in good faith and exceeded the projections they made “because the owners of the business rolled up their sleeves and looked around to see where they could get business.”
“Now they discover that they are being horribly punished. It’s something that needs to be addressed quickly, ”he said.
Martin said there is really no motivation to target or undermine people who applied in good faith under the scheme.
He said this has been an unpredictable global pandemic that no one could anticipate.
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