Anger over go-ahead for next week's Vat payment demand

Groups representing the most vulnerable small companies, including tourism, hospitality, and retail firms facing into the Covid-19 storm, say they are angered by the Government’s decision to allow Revenue collect a regular Vat payment at the end of next week.

Neil McDonnell, head of business group Isme, said he was “absolutely underwhelmed” and predicted the Government will be forced into an immediate U-turn over the looming Vat payment after it emerged that Revenue did not plan to defer the payment for small firms after all.

Adrian Cummins, head of the Restaurants Association of Ireland — which has warned that its members will go out of business as the State goes into an effective lockdown in the coming weeks — called for a moratorium on the Vat payment.

“A specific aid package for the tourism and hospitality sector needs to be in place by Monday morning,” Mr Cummins said.

Limerick Chamber of Commerce said it was “essential that the Government allows deferral of the payments that fall during this period of confinement when business is interrupted”.

“Our membership has already felt the commercial hit of Covid-19, and many will struggle to keep their doors open in the coming weeks,” it said.

The angry responses came after the Revenue said it was providing new measures to help SMEs — small firms generating less than €3m in annual revenues — facing cashflow difficulties.

In new measures, firms facing difficulties should submit their tax returns on time, Revenue said, but will not face late payment penalties for their Vat bills payable for January and February — due at the end of this month, nor on their employers’ PAYE payments for March.

It also said it had suspended “debt enforcement activity” until further notice.

Revenue issued key advice earlier this week to businesses experiencing tax payment difficulties, and appreciates that such difficulties can cause worries for businesses in terms of their ability to keep an otherwise good tax compliance record on track.

“It is important that businesses know that Revenue has a long history of working very successfully with taxpayers to resolve their tax payment difficulties,” it said.

In a joint news conference, Finance Minister Paschal Donohoe and Business Minister Heather Humphreys welcomed the new measures offered by Revenue for SMEs and detailed the range of supports they had announced earlier this week to help businesses to survive the crisis.

Isme’s Mr McDonnell said that new figures published yesterday by the Central Bank which showed that Irish banks charge SMEs an average of over 4.6% for their loans — up from around 4.3% a year earlier — showed again that small firms here were being charged among the costliest loans in the eurozone.

The scale of the crisis for businesses was again starkly illustrated as IAG-owned British Airways warned that its survival was at stake and the BA chief executive told staff of plans to cut jobs and ground aircraft to tackle the “worsening situation” caused by coronavirus.

IAG also owns Aer Lingus, Iberia, and Vueling.