16,000 employers do not meet tax criteria for new government wage support

Revenue collector-general Joe Howley said employers must demonstrate their business will experience a 30% reduction in business due to Covid-19 to qualify. File Picture.

Around 16,000 employers do not currently have the necessary tax clearance to move onto the government's new wage subsidy scheme, which is effective from September 1.

The Employment Wage Subsidy Scheme (EWSS) will replace the Temporary Wage Subsidy Scheme (TWSS) in two weeks. Revenue has urged businesses to apply for the tax clearance, which many will not even be aware is needed.

Tax clearance is confirmation from Revenue that the tax affairs of the relevant business are in order.

To qualify, the business must be compliant with all obligations under tax legislation in relation to the filing of tax returns and payment of taxes.

The tax body said approximately 16,000 employers who registered for the TWSS do not currently hold tax clearance, and may have never previously applied as it was not relevant to their businesses. 

"By applying now, they will be able to confirm their entitlement to tax clearance or will be given full information on the outstanding tax returns or tax debts that they will need to resolve to get tax clearance," Revenue said.

The EWSS provides a flat-rate subsidy to qualifying employers based on the numbers of paid and eligible employees on their payroll, according to Revenue. 

This differs from the TWSS which makes a payment to eligible employees via their employers, it said.

Collector-General, Joe Howley, said: "To qualify for the EWSS, an employer must be able to demonstrate that their business will experience a 30% reduction in turnover or orders between July 1 and December 31, 2020, and that the decline is caused by Covid-19. 

"Additionally, and unlike TWSS, the employer must have tax clearance to be eligible to join the EWSS and remain tax clear to continue receiving the EWSS benefits.”

Generally, tax clearance is only required by businesses who wish to apply for or renew certain licences, or to access certain grants and schemes, Revenue said. 

As such, many employers have never needed to apply for tax clearance because of the nature of their business, it added.

Mr Howley urged any employer who meets the qualifying criteria and intends to avail of the EWSS to "immediately apply for tax clearance" so that they can have "the confidence of knowing that they will be able to receive the EWSS support from September".

An application for tax clearance can be made easily through the eTax clearance service online, he said.