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REDUCTION IN STANDARD RATE OF VAT


Revenue have recently announced as part of the July Stimulus package a temporary reduction in the standard rate of VAT from 23% to 21%.  All other VAT rates will remain unchanged.

This is due to take effect from the 1st of September and will remain in place until the 28th of February 2021. 

While this is a welcome development businesses may face a number of issues and challenges in relation to the rate reduction.  It is important that businesses are ready for the change and that they review their operations in advance of the rate change. 

Typical questions that may arise for businesses include:

  • Can the sales systems, including point of sales terminals, be updated to reflect the reduced rate?
  • Will the business need to adjust the price of goods/services provided to reflect the rate cut?
  • If the business pays their VAT liability by way of a monthly direct debit, does the rate reduction allow for a reduction in the monthly payment?
  • If the supply spans two periods with different VAT rates, the business will need to ensure that the correct rate of VAT is charged.
  • If an advanced payment has been received in respect of a supply, what is the correct VAT rate to be charged in respect of the supply?

If you have any queries in relation to the above please do not hesitate to contact a member of the Cooney Carey tax department at 01 677 9000 or by email at info@cooneycarey.ie

To keep in touch, connect with us on LinkedIn.

Posted on September 3, 2020 by Cooney Carey

REDUCED INTEREST RATE APPLICABLE TO NON- COVID-19 TAX LIABILITIES

As part of the measures included in the July Stimulus package, a reduced interest rate on overdue non-COVID-19 tax liabilities has been introduced.

Where a taxpayer enters into a payment arrangement with Revenue in respect of non-COVID 19 tax liabilities before the 30th of September a reduced interest rate of 3% will be applicable to the debt.  With interest rates on outstanding tax liabilities typically ranging between 8%-10% per annum, this is a welcome development for taxpayers struggling to deal with outstanding tax debts.

If the taxpayer has previously entered into a payment arrangement the reduced rate of 3% will apply to the outstanding tax liability as of the 1st of August.

If you currently have outstanding tax liabilities arising from the pre-COVID-19 period it is important that you engage with Revenue without delay to avail of the reduced rate.

If you require any assistance, please do not hesitate to contact a member of the Cooney Carey tax department at 01 677 9000 or by email at info@cooneycarey.ie

To keep in touch, connect with us on LinkedIn.

Posted on September 3, 2020 by Cooney Carey

ACCELERATED LOSS RELIEF FOR COMPANIES

As part of the July Stimulus package recently announced, companies incurring losses in 2020 may be able to make a claim to elect for 50% of the estimated losses to be allocated against prior profits, thereby resulting in a tax refund or a reduction in the level of corporation tax being paid.

To avail of this scheme, a company will need to be satisfied that it expects to incur a loss in an accounting period which includes some or all of the period commencing on the 1st of March 2020 and ending on the 31st of December 2020.

The company should estimate the amount of the expected loss and keep detailed calculations as to how the estimate was arrived at.  The company can then make a claim to Revenue to have 50% of the estimated loss set off against the previous period’s corporation tax liability. 

The claim to Revenue can be made as early as 4 months from the beginning of the loss-making period and up to 5 months after the end of the period.  Companies can therefore potentially receive 50% of their corporation tax refund during the loss-making period, rather than waiting until the accounts had been completed and corporation tax return for the loss-making period submitted to Revenue before a loss claim could be submitted.

To be eligible to make a claim the company must be fully tax compliant. Where a company has entered into a debt warehousing agreement or a payment arrangement with Revenue it will be considered tax compliant.

If you believe that the above may be of benefit to your company, please do not hesitate to contact a member of the tax team at 01 677 9000 or by email at info@cooneycarey.ie

To keep in touch, connect with us on LinkedIn.

Posted on September 3, 2020 by Cooney Carey

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