Company hit with €313,400 tax bill to repay covid support payments

Company had appealed the Revenue assessment.

A company has been hit with a €313,400 tax bill after losing an appeal against a Revenue assessment it had failed to abide by the terms of a scheme introduced to provide financial support to businesses during the covid-19 pandemic.

The Tax Appeals Commission ruled the unnamed firm could not prove it had carried out monthly compliance checks as required by the Employment Wage Subsidy Scheme to demonstrate it had suffered a downturn in turnover of 30% or more to be eligible for the scheme.

The company had appealed the Revenue assessment made in September 2024 for a total of €313,400 relating to various periods between July 2020 and April 2022, when the tax authorities claimed it had failed to abide by the terms of the EWSS.

Guidelines published by Revenue in relation to the EWSS stated employers must undertake a review of a six-month period on a rolling monthly basis to ensure they continued to meet the eligibility criteria for the scheme.

The chief executive of the company, which was set up in 2018, gave evidence it had been badly hit by the pandemic, and its main customer's orders had fallen sharply.

When asked about conducting rolling reviews, the witness said he “had been doing that all along, the whole way through covid”, However, he expressed surprise he had not furnished such reviews when requested by Revenue.

The TAC heard while correspondence suggested the company had forecasted customer orders of €4.52m in 2019, its chief executive accepted under cross-examination the actual figure was under €2.2m.

Counsel for Revenue claimed the company was wrong to have compared expected orders in 2019 with actual orders for 2020 and 2021.

The TAC heard the company experienced a reduction of 14% in turnover between July 2020 and December 2020 compared to the same period in 2019 based on actual orders.

Revenue said orders increased by 261% and 95% over subsequent periods in 2021 and 2022 compared to the corresponding dates in 2019.

In her ruling, TAC commissioner Jo Kenny said she was surprised the company had not furnished Revenue with rolling reviews when requested, given it was required to retain all records relating to the EWSS, and its chief executive had given evidence they were carried out the whole way during the pandemic.

Ms Kenny said she could not accept, on the balance of probabilities, that such reviews were conducted.

As a consequence, she ruled the company had provided no documentary evidence as required under the terms of the EWSS, which meant Revenue was correct to disentitle it from payments of €313,400 under the scheme.

Ms Kenny said she was satisfied the legislation did not permit claimants to use forecasts or expected customer orders as a basis for comparing turnover figures.

The commissioner acknowledged the company’s business was impacted by the pandemic and its staff had to physically attend its premises to handle deliveries. 

However, Ms Kenny said the issue was not whether a business was affected by the pandemic but whether it had met the criteria set down in legislation to be eligible for the EWSS.

The company signalled it may seek a judicial review of the ruling as the TAC confirmed it had been asked to state a case for an opinion of the High Court in respect of the matter.