Business Financial Relief

Grants / Supports May 20

On 2 May 2020 government announced further measures

• €10,000 “restart grant” for micro and small businesses based on a rates waiver/rebate from 2019 (estimated that this will cost €250m in total);
• €2bn Pandemic Stabilisation and Recovery Fund established, within the Ireland Strategic Investment Fund (ISIF), which will make capital available to medium and large enterprises;
• €2bn COVID-19 Credit Guarantee Scheme to support lending to SMEs for terms ranging from 3 months to 6 years, which will be below market interest rates;
• “warehousing” of tax liabilities for a period of twelve months after recommencement of trading during which time there will be no debt enforcement action taken by Revenue (this measure will require new legislation to be introduced before it can take effect);
• a commitment to local authorities to make up the rates shortfall, so that local authorities can continue to provide full services to the public;
• the waiving of commercial rates for a three-month period beginning on 27 March 2020 for businesses that have been forced to close due to public health requirements, and
• Government also welcomed the Banking and Payments Federation of Ireland announcement of an extension of payment breaks for businesses and households to 6 months for those requiring assistance which is being provided to bank and non-bank customers impacted by COVID-19.

Under the July 2020 job stimulus package the maximum relief on the help to buy scheme was temporarily increased from €20,000 or 5 percent of the property value to €20,000 or 10% of the property value for the remainder of the calendar year 2020.

Revenue Easements

Revenue prioritised approval and processing of tax repayments and refunds. Revenue suspended the tax audit another compliance intervention activity on taxpayer’s premises of further notice

Legislation passed during the Covid health crisis allowed for accelerated loss relief for companies on a temporary basis. Companies were allowed to estimate trading losses carry back up to 50% of the loss to the preceding year to generate a tax refund or offset tax payable. Accelerated loss relief was based on the best estimate.

The Specified accounting period is an accounting period of a company carrying on a trade including some or all the period commencing on 1 March 2020 and ending on 31 December 2020. The preceding accounting period refers to the accounting period(s) which precedes a specified accounting period in which the company incurs a trading loss.

Estimated relevant trading loss is a trading loss incurred, or expected to be incurred, based on the best estimate by a company in a specified accounting period.

Estimated non-relevant trading loss is a loss incurred, or expected to be incurred, based on the best estimate that may reasonably be made, by a company carrying on an excepted trade.

Timing of Interim Claims

An interim claim may be made 4 months after the beginning and up to 5 months after the end of the specified accounting period. Interim claims may be revised as the accounting period progresses.

The declaration must be made that the trading loss has occurred or is reasonably expected to occur. The company must be tax compliant. No immediate requirement of supporting documents was made.

Once the specified accounting period had ended, the company was able to prepare the necessary accounts for the specified accounting period and quantify the amount of the actual trading loss incurred. Following the end of the specified accounting period and the quantification of the actual trading loss for that period, the company would be able to make a claim to carry back any remaining trading loss available for the preceding accounting period.

If a company significantly over-estimated its trading loss, the company is required to adjust downwards the amount of the interim claim no later than the due date for the filing of the return in respect of the specified accounting period in which the loss was made.

Any interim claims for relief which are found to be excessive may be liable for a penalty. Also, it could result in an underpayment of preliminary tax for the period.  This would lead to interest on the underpayment.

Insolvency Proceedings

The Companies (Miscellaneous Provisions (Covid 19)) Act 2020 made temporary provisions to the Companies Act to deal with the Covid 19 crisis. The statutory debt required to found an application for winding up was temporarily increased to €50,000 both for individual debts and debts for two or more creditors acting collectively.

The examinership period of protection was temporarily extended to provide for an additional period of 50 days for submission by the examiner of its report to the court thereby allowing a total period of 150 days, where the court is satisfied examiner demonstrates there are exceptional circumstances including of impact Covid 19.

Company Law Easements

There were provisions in the 2020 Act allowing for electronic AGMs and EGM’s. It also provided for extension of the dates for AGMs which were due before the end of 2020. The was provision for cancellation variation of the meeting where this was the necessary due to exceptional unexpected circumstances. Certain procedures applied.

Directors were empowered to withdraw or reduce a recommended dividend after issue of the notice of general meeting where they determined this is needed by reason of the consequences of Covid 19 on the affairs of the company. They required unanimous written shareholder consent and at least three days’ notice was required to members before the general meeting.

A permanent amendment was made to the Companies Act 2014 in relation to proceedings before the Workplace Relations Commission (WRC). Where an employer is in liquidation, employees of that company no longer needed to get leave from the High Court to bring proceedings before the WRC. This replaced the exemption that currently applied to proceedings before the Employment Appeals Tribunal, the functions of which had been largely replaced by the WRC.

The Act relaxed the law regarding the execution of documents under company seal for the duration of the interim period. By enabling the use of counterparts, it will be easier for a company to execute documents under company seal in circumstances where the company seal and the directors/company secretary were in different locations. This will be particularly helpful at signing and closing of transactions or restructurings during the Interim Period.

Credit & Loans

The Credit Guarantee (Amendment) Act allowed for the Covid 19 credit guarantee scheme. The scheme allowed for up to €2 billion credit. It gave a partial government guarantee (up to 80%) to lenders from losses on loans which qualified to qualifying SMEs. It amended the 2012 Credit Guarantee Act.

The 2012 legislation provides for guarantees up to a total of €150 million. There was a very substantial increase to help assist with the Covid 19 consequences. The state guarantee level was increased up to €1.6 billion.

The 2012 legislation provided that a qualifying enterprise was an SME established in the state employing fewer than 250 people (worldwide) turnover does not exceed €50 million or banshee does not exceed €43 million. The 2020 legislation increased the employees’ number to 499 (within or outside the State). Primary producers were also to be included,

Under the scheme loans of between €10,000 and €1 million may be made available to participating lenders to SMEs for terms of up to 6 years. Loans may be term loans demand loans overdrafts performance bonds.

The scheme is available only to viable SMEs. Financial viability is measured ignoring cash pressure issues caused by Covid 19. In order to qualify SMEs must show an adverse impact of at least 15% of actual or projected turnover and profit due to Covid 19 impact.

The scheme was open for guarantees until to be put in place of the end of 2020 or such later date as may be prescribed no later than the end of 2021.

The interest rate is at a below-market rates together with the premium to provide for the cost of the guarantee. The rate of interest will be is lower than with commercial facilities. Lower interest moratoria are permissible to be determined by the lender the borrower.

The state reimbursed 80% of the loss of the loan with the lender taking the 20% balance. The State and agencies were not involved in the loan origination or decision-making.

Commercial Lettings

The Residential Tenancies and Valuation Act 2020 provided temporary restrictions  evictions designed for residential property but interpreted as also applicable to commercial property under the emergency measures in the public interest (Covid 19) act 2020.The new legislation created new provisions for residential tenancies discussed separately.