"Thousands of workers to get Covid-19 tax bills next week"

I expect that many accountancy firms that provide payroll services will be receiving a deluge of queries from their clients (via their employees). How will you be managing these calls?


https://www.irishtimes.com/business/personal-finance/thousands-of-workers-to-get-covid-19-tax-bills-next-week-1.4450928

duffysfarm

I will be contacting clients before next week to advise them that employees will.be receiving these letters and they need to have a policy in place before staff ask them to pay it.

Imo as an employer and as an accountant the employer should pay the tax due for the staff in the majority of cases (i know pubs have had a terrible year). In a lot of other cases companies have actually had a reasonably ok year and i think its unfair that the employee ahould be stuck with the tax bill

brenbrady wrote: »

I expect that many accountancy firms that provide payroll services will be receiving a deluge of queries from their clients (via their employees). How will you be managing these calls?


https://www.irishtimes.com/business/personal-finance/thousands-of-workers-to-get-covid-19-tax-bills-next-week-1.4450928

capefear

most of the clients we deal with are going to pay the tax on the employees behalf but there are a few clients that wont as they dont have the cash and their attitude is that the employees would have had a tax bill if they put them on the PUP, so the employee should have been putting some money aside or they can spread the tax bill over 3-4 years by reducing their tax credits.

I think its unfair the revenue not allowing the employer to declare the payment as a business expense and it needs to be added back for ct purposes.

capefear

capefear wrote: »

most of the clients we deal with are going to pay the tax on the employees behalf but there are a few clients that wont as they don't have the cash and their attitude is that the employees would have had a tax bill if they put them on the PUP, so the employee should have been putting some money aside or they can spread the tax bill over 3-4 years by reducing their tax credits.

I think its unfair the revenue not allowing the employer to declare the payment as a business expense and it needs to be added back for ct purposes.

When you say the employer is going to pay the tax, do you mean via payroll i.e. re-gross the wages that week for whatever the liability is?

duffysfarm

duffysfarm wrote: »

I will be contacting clients before next week to advise them that employees will.be receiving these letters and they need to have a policy in place before staff ask them to pay it.

Imo as an employer and as an accountant the employer should pay the tax due for the staff in the majority of cases (i know pubs have had a terrible year). In a lot of other cases companies have actually had a reasonably ok year and i think its unfair that the employee ahould be stuck with the tax bill

Would that not rule out the eligibility for the employer claiming T/EWSS i.e. if they had a reasonable year, are they entitled to the subsidy?

Stratvs

brenbrady wrote: »

When you say the employer is going to pay the tax, do you mean via payroll i.e. re-gross the wages that week for whatever the liability is?

Apparently if the employer is to pay the tax they do it by revising the Tax/USC on the final PSR for 2020 ( Just from what I've seen when I Googled it ). No regrossing of pay is required and no BiK arises. However that may be problematic on some payroll packages and a direct ROS entry may be needed. Not sure whether employers would go this route.
https://www.revenue.ie/en/employing-people/twss/employers/index.aspx#:~:text=Revenue%20will%20facilitate%20employers%20who,to%20pay%20the%20liability%20involved.

Alternatively the employer can give the employee the amount and the employee pays Revenue on RevPay.

capefear

brenbrady wrote: »

When you say the employer is going to pay the tax, do you mean via payroll i.e. re-gross the wages that week for whatever the liability is?

They revenue are allowing employers redo the dec payroll and the software providers will include a line (I cant remember what its called but call it tax due for now) the employer can go back to the december payroll for joe bloggs (employee who has a tax bill of say 3K) and in the line called tax due the employer can make a payment of 3k to clear employees tax bill. The employer has until June to do this, there will be no bik or prsi or usc on this payemnt. If the employer does this, the 3K is treated as an addback for CT1 in 2020.


I hope this makes sense and its subject to change as I havent caught up on all the changes.

Osborne

Apologies for jumping on this thread but I can't find the answer to a question elsewhere. And excuse me this is a stupid question:

If an employee was on the wage subsidy scheme and received their usual net pay each month, who does the tax liability lie with? If it is the employee, surely this would mean they would be left short for the year and not received their correct gross salary?

Alan_007_

Osborne wrote: »

Apologies for jumping on this thread but I can't find the answer to a question elsewhere. And excuse me this is a stupid question:

If an employee was on the wage subsidy scheme and received their usual net pay each month, who does the tax liability lie with? If it is the employee, surely this would mean they would be left short for the year and not received their correct gross salary?

The tax bill will lie with the employee.

You're quite right in saying that the employee will be left short and will not have received their correct gross salary. This is something I've been wondering myself as it could surely lead to HR/contract law issues for employers.

Osborne

Alan_007_ wrote: »

The tax bill will lie with the employee.

You're quite right in saying that the employee will be left short and will not have received their correct gross salary. This is something I've been wondering myself as it could surely lead to HR/contract law issues for employers.

Thanks Alan. It will be very interesting to see how it plays out.

ari101

Alan_007_ wrote: »

The tax bill will lie with the employee.

You're quite right in saying that the employee will be left short and will not have received their correct gross salary. This is something I've been wondering myself as it could surely lead to HR/contract law issues for employers.

Any employers who put staff on lay off/short term, or were paying them less for their contractual rate of pay for hours worked, may have legal exposure if they did not follow appropriate HR / employment law rules when doing so. E.g. notices, agreement with EE to reduced pay, etc.

We'll see now how much comes out of the woodwork when the tax bills land...

ari101

brenbrady wrote: »

Would that not rule out the eligibility for the employer claiming T/EWSS i.e. if they had a reasonable year, are they entitled to the subsidy?

Not necessarily, eligibility for subsidy schemes was primarily based on specific rules around reduced turnover. Businesses may have managed to turn things around since, they may still have made money if they also saved on costs, they may be lucky to have has cash savings, not yet used up, and are willing to use to help employees with these bills, etc.

gudede

ari101 wrote: »

Any employers who put staff on lay off/short term, or were paying them less for their contractual rate of pay for hours worked, may have legal exposure if they did not follow appropriate HR / employment law rules when doing so. E.g. notices, agreement with EE to reduced pay, etc.

We'll see now how much comes out of the woodwork when the tax bills land...

This will be interesting. I expect to have a €2k liability and expect my employer to pay for same. My gross wage is down nearly €11k, so its beneficial for them to pay my liability.

capefear

Was speaking to a couple of employers this week about this and some are regretting not putting their employees on the PUP from the start as they tried to do the right think by keeping their employees on the same net pay and using their cash reserves to do this and now some employees are looking for the employers to pay the tax bill as well.

It’s going to be interesting as I have heard of people getting ready to lodge complaints to the wrc.

L1011

capefear wrote: »

It’s going to be interesting as I have heard of people getting ready to lodge complaints to the wrc.

I'm in an employer who barely qualified for TWSS, probably didn't qualify by the end of it, and definitely do not qualify for EWSS.

If I'm down versus my contracted wage I'll be off to the WRC on the morning of the 18th (figuratively - if they're still dithering about paying it I'll wait a bit)

I don't see any shred of argument that could be made against it under the Payment of Wages legislation.#

Its going to be very, very interesting for those working for firms that asked for the TWSS money back when that's audited - going to be plenty of arm-chancing claims made.

MartyMcFly84

Was speaking to a couple of employers this week about this and some are regretting not putting their employees on the PUP from the start as they tried to do the right think by keeping their employees on the same net pay and using their cash reserves to do this and now some employees are looking for the employers to pay the tax bill as well.

It’s going to be interesting as I have heard of people getting ready to lodge complaints to the wrc.

The company I am working for said it would repay the liabilities for employees. However its a bit of mess for people who share tax credits with partners and if their partners were also on the scheme. So it not as straight forward as was presumed.

I think many companies also failed to communicate to staff that the TWSS portion of their pay was not being taxed and would be liable to income taxes at a later date.

I know some companies did pass this on and asked employees to keep some of their net salary for their tax bill, others did not, or perhaps did not fully understand the scheme. As a result many employees are getting an unwelcome surprise when they see a liability owed and are asking employers to pay for it.