Covid-19 support scheme not entirely what pandemic-hit businesses had hoped for
Brian Keegan is the director of public policy at Chartered Accountants Ireland
There are two possible, and equally legitimate, attitudes to providing business supports as we cope with the pandemic.
The first is for the Government to pump money into the economy to keep it in a form of suspended animation until everything gets back to normal, or as close to like it was as recently as February of this year. That approach envisages that either a safe and successful vaccine becomes widely available or a safe and effective cure for Covid-19 becomes available in relatively short order.
Another approach is to recognise that Covid-19 disruption is a long-term phenomenon that we must manage over an extended period of time. This approach involves providing levels of support which peak during a national lockdown, and which are withdrawn when a lockdown is eased until the next phase of the pandemic occurs. In general, this latter approach characterises the Government responses and supports so far introduced.
The Covid restrictions support scheme was announced on budget day last month and was aimed at businesses operating from a premises whose trade has been impacted by Covid-19 restrictions.
The scheme was prompted, in part at least, by various business representative associations which pointed out that commercial premises would need to be maintained if Government regulations had them closing down over extended periods. Maintenance is more problematic during the winter months than over the summer.
The final shape of this relief has emerged with the publication of the Finance Bill, and it is not entirely as had been hoped for. Any support which can provide up to €5,000 weekly to businesses compromised by Covid-19 is useful. However, any business wishing to claim the Covid restrictions support scheme needs to know about the caveats.
🧳🍴🎭 Is your business eligible for the Covid Restrictions Support Scheme?
— Green Party Ireland (@greenparty_ie) November 7, 2020
Launching the scheme this week, @Cathmartingreen said it will give businesses in tourism, hospitality & the arts a further financial lifeline to help them through the pandemic. pic.twitter.com/KHrPXvx4hP
The relief is being administered by the Revenue Commissioners, which in recent months have shown itself as adept at funnelling money to businesses through wage support schemes and tax-debt warehousing as it is collecting it from businesses in the usual course. To qualify for the Covid restrictions support scheme, a business must show that its turnover is only one quarter or less than what it might have been before coronavirus and lockdowns. In common with all tax procedures, this evaluation is to be carried out on a self-assessment basis.
Going by the experience this year so far, Revenue will comprehensively check any self-assessment of entitlement to any relief being paid because of the pandemic. The Revenue checks on claims for support are broader than the checks normally carried out for tax compliance.
The term 'business premises' also takes on a very specific meaning for the Covid restrictions support scheme. By and large, the premises that can qualify are permanent retail premises. In general, premises that do not involve customer footfall do not qualify. Professions are not included.
Pandemic or not, it's a recurring feature of Government incentives and supports that service companies are overlooked. Charities do not qualify either. Though the conditions for qualification are stringent, any business that could qualify should apply.
At present, the scheme will run until March 31 during weeks when Covid-19 level 3 or higher restrictions apply (though there are some exceptions). Almost 4,000 businesses have already registered for help through the scheme.
None of the pandemic supports are, in any sense, a giveaway. Rather they are compensation to businesses for loss of earnings due to their compliance with health regulations.
While the supports come at a heavy cost to the exchequer, with the Covid restrictions support scheme estimated to cost €40m for every week it applies, the cost by any measure of not providing them would be very severe.
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