covid Archives - Pat Carroll PCCO - Chartered Accountants & Tax Advisors

Number of insolvencies down 12% as Covid-19 impact not fully materialised

There was a reduction in the number of company insolvencies in the first six months of this year, according to new figures from Deloitte.

Today’s figures suggests that the impact of Covid-19 has not fully materialised. 

Deloittes said there were 273 company insolvencies between January and the end of June, a reduction of 12% on the same six month period last year. 

Although many companies – particularly in the retail and hospitality sectors – were closed for weeks or months, they have been assisted by state supports including the government payment schemes and the freezing of certain fixed costs. 

However, that situation is expected to change in the months ahead as businesses reopen and the state gradually withdraws the supports. 

David van Dessel, Financial Advisory partner at Deloitte, said insolvencies were expected to increase in the latter part of this year and next year. 

He appealed to companies experiencing challenging trading conditions to take early action so they can avail of the greatest range of options, including refinancing and restructuring  

“The sustained loss of trade (in recent months) will likely prove very damaging for many businesses and some will not be in a position to continue trading as a going concern,” Mr van Dessel said. 

In addition, mandatory social distancing measures as well as changes in consumer behaviour and sentiment will likely bring fresh trading challenges for businesses to overcome,” he said. 

“While the current insolvency numbers already indicate that the retail and hospitality sectors are experiencing more insolvencies than in previous periods, these numbers are expected to increase throughout 2020 and into 2021,” he warned.

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Spend yesterday approached pre-Covid levels – Revolut

Hairdressers, barbers, spas, chiropractors and dentists were among the big beneficiaries of the Phase 3 reopening of the economy yesterday, according to transaction data from Revolut.

Pubs and restaurants also got a boost from the restart of business, although to a lesser extent than the other big winners.

Excluding online shopping, overall spending yesterday by Revolut’s one million Irish customers across 15 categories was up 52% compared to average daily spending during the lockdown.

It was also almost back at average daily spending levels for the month before the Covid-19 pandemic led to severe restrictions to business activity across the country over three months ago.

Compared to a normal Monday prior to lockdown, the overall spend was up 23%.

Not surprisingly, high demand for personal grooming services resulted in a significant bounce in that sector, with spending by hairdressers and barbers up 72% versus the daily average prior to the arrival of restrictions.

Revolut says the data suggests that prices charged by hair and beauty providers increased only marginally, with customers spending an average of €37.81 in hairdressers and barbers yesterday, compared to an average before lockdown of €36.15.

Spending on spas was also up by nearly half compared to the average spend prior to restrictions being put in place.

But the picture was more mixed in the hospitality sector, with overall spending in pubs still less than half of the pre-lockdown daily average, although higher than an average Monday before the pandemic struck.

The requirement for customers to buy a meal worth at least €9 helped propel spending, with the average customer handing over €27.64 in the pub last night, compared to just €13.99 on an average night out before Covid-19.

Spending in restaurants though was less strong, coming in at a third of what would have been spent on an average night before the restrictions. 

It was also just over half of what would be spent on a regular Monday night before Covid-19.

Many people also used the lifting of restrictions as an opportunity to attend a dentist or chiropractor, with both services seeing a more than doubling in spend versus the period before the pandemic arrived.

When it comes to taxi use, spending was much lower than it was before the Government introduced restrictions, at around a quarter of average levels prior to restrictions being introduced.

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Covid-19 committee hears SMEs call for more Govt funding to survive

The Oireachtas Special Committee on Covid-19 Response has heard calls for more help for small and medium businesses affected by the pandemic.

The Chair of SME Recovery Ireland, John Moran, told politicians that small and medium businesses across Ireland are dying and need more funding to help them to survive.

In his opening statement, Mr Moran called for a €15bn bailout, including an immediate injection of liquidity worth €6bn to help small and medium businesses impacted by Covid-19.

Mr Moran said the Government’s response has been “too slow, too small and too expensive” and that existing schemes must be restructured as grant aid and not debt.

He said the Government’s July stimulus package must make lower cost liquidity available immediately for firms and include a major fiscal grant scheme.

Mr Moran told the committee that small and medium businesses need cash and not mountains of debt.

He said the economic epicentre of this pandemic has been SMEs, with 85% of businesses having closed to some degree, of which 34% shut completely during lockdown.

Mr Moran said the State is not getting ahead of the problem and does not appear to have a handle on the huge cost of the pandemic to the SME sector.

Jean McCabe, managing director of fashion retailer Willow Boutique, told the committee that many businesses are opening up with significant debt.

She said that the trading environment going forward would be very difficult and taking on more debt is not possible.

She said business owners in fashion are at their “wits end” about whether to continue trading or not because the challenges facing them are so great.

Ms McCabe said businesses need cash and liquidity now.

Representatives of the hotel, pub and restaurant sectors told the committee that employment supports should be continued, and be extended to seasonal workers, and that ongoing assistance with commercial rates is needed.

Chief Executive of the Vintners Association of Ireland Padraig Cribben said this period has been difficult for pubs and turnover in the industry dropped to zero and said there is no indication as to when “normal trading” conditions will return.

The Irish Hotels Federation said it is vital that the Temporary Wage Subsidy Scheme is continued and extended to include seasonal employees, with Chief Executive Tim Fenn saying additional Government measures on liquidity and competitiveness are also required to protect tourism livelihoods.

He called for a reduction in tourism VAT to 5% until December 2021 followed by a permanent restoration to 9% to assist recovery.

Adrian Cummins, Chief Executive of the Irish Hotels Federation, said the restaurant and hospitality sector was hit hardest by this crisis and it will take the longest to recover.

He warned that without immediate access to the TWSS, seasonal businesses, the mainstay of Irish Tourism, will not reopen.

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Workers on Covid-19 benefit payments face tax bills

A large number of full-time workers in receipt of the Temporary Wage Subsidy Scheme or Pandemic Unemployment Payment face tax bills of between €150 and €2,828 by the end of the year, Taxback.com has warned.

The latest Taxback.com Taxpayer Sentiment Survey revealed that 57% of respondents receiving either payment are not aware that a future tax liability is building.

Of the 43% who said they were aware of the tax implications, feedback suggests that there is big possibility that they will not know what they will, or can, do about it.

Since its introduction in March, over 551,800 employees have been paid by the TWSS, while 517,600 have received the PUP. 

Taxback.com said the implementation of these supports was absolutely necessary and helped thousands of employers and employees alike.

But it added that the processing of payments fell short in its execution which will leave those in receipt of the payments out of pocket by the end of the year.

Marian Ryan, Consumer Tax Manager with Taxback.com, said that when assessing the impact, we were mindful of the immediacy with which the Government had to roll out the scheme, so anomalies were to be expected. 

“The issue, however, is that thousands of employees appear to be completely unaware of what is coming down the tracks,” she said. 

“The scheme was rolled out in good faith to see employers through the instability of Covid-19 – and to ensure they emerge from the downturn – but a biproduct of its expediency could see less money in the pockets of employees in 2021 and possibly 2022 depending on how the tax burden is spread,” she added.

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Workers on Covid-19 benefit payments face tax bills

A large number of full-time workers in receipt of the Temporary Wage Subsidy Scheme or Pandemic Unemployment Payment face tax bills of between €150 and €2,828 by the end of the year, Taxback.com has warned.

The latest Taxback.com Taxpayer Sentiment Survey revealed that 57% of respondents receiving either payment are not aware that a future tax liability is building.

Of the 43% who said they were aware of the tax implications, feedback suggests that there is big possibility that they will not know what they will, or can, do about it.

Since its introduction in March, over 551,800 employees have been paid by the TWSS, while 517,600 have received the PUP. 

Taxback.com said the implementation of these supports was absolutely necessary and helped thousands of employers and employees alike.

But it added that the processing of payments fell short in its execution which will leave those in receipt of the payments out of pocket by the end of the year.

Marian Ryan, Consumer Tax Manager with Taxback.com, said that when assessing the impact, we were mindful of the immediacy with which the Government had to roll out the scheme, so anomalies were to be expected. 

“The issue, however, is that thousands of employees appear to be completely unaware of what is coming down the tracks,” she said. 

“The scheme was rolled out in good faith to see employers through the instability of Covid-19 – and to ensure they emerge from the downturn – but a biproduct of its expediency could see less money in the pockets of employees in 2021 and possibly 2022 depending on how the tax burden is spread,” she added.

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Just 12% of bosses predict all staff will be back in offices post Covid-19

A new survey has found that just 12% of business leaders believe all staff will be back in their companies’ office/workspace once the Covid-19 lockdown is lifted, while 40% predict an equal mix of staff working in the office and remotely.

31% of bosses are either planning to downsize their office space or having it under consideration, the snap poll survey by the Institute of Directors in Ireland shows. 

Nearly 30% of respondents also said that their current office space/working environment is not conducive to implementing Government-approved social distancing measures.  

But the survey also reveals that 75% of business leaders believe the Government’s phased plan to reopen the economy is either “well judged” or “adequate”. 

While 71% of business leaders acknowledged that a recession is imminent, they predicted that it will be a short-term one.

Today’s survey also showed that 37% of respondents’ businesses availed of the Government’s Temporary Wage Subsidy Scheme, while 54% said they did not, with 9% saying the scheme did not apply to them.

Maura Quinn, chief executive of the Institute of Directors in Ireland, said that rumours of the demise of what many people call “the office” have been grossly exaggerated, but opportunities as well as challenges now face business leaders and employees alike. 

“The future of workplaces and recruitment is being reconfigured. Business leaders will need to be agile to allow for these new changes, as well as showing clear leadership and guidance to help direct it,” Ms Quinn said. 

The IoD CEO said the country is exiting the coping stage of Covid-19 in terms of how businesses operate and a substantial majority of business leaders believe a short-term recession is looming. 

“There is no avoiding the stark reality of that happening. We are an open economy and our overseas markets have been similarly impacted,” she stated. 

“For this reason, we call on the Government to ensure continued business support measures are being put in place which, in turn, will help kick-start the economy,” Ms Quinn added.
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Over half a million receive Covid Unemployment Support Payments

533,000 people have today been issued payments of the Covid-19 Pandemic Unemployment Support payment – up 26,000 on the figure a week ago, according to the Department of Employment Affairs and Social Protection.

Around 54,000 of those are receiving payments for the first time. 

These Covid Pandemic payments first introduced on 16 March are in addition to the 210,000 people on the live register receiving “normal” Jobseekers’ Benefit – an increase of 3,000 in the last seven days. 

The Pandemic Payment figures also exclude workers whose jobs are now being subsidised under the Temporary Wage Subsidy Scheme (TWSS), to which 42,100 employers have now signed up. 

A week ago, 130,000 workers were covered by the TWSS – but the Revenue Commissioners confirm that figure has risen to 219,400, with approximately 80% of those receiving a top-up from the employer.

According to the department, it has now processed 625,000 applications for the Covid-19 Pandemic Unemployment Payment or a jobseeker’s payment since 16 March – the equivalent of three years’ claims in a month.

That excludes duplicate claims made by some applicants.

However, around 40,000 have closed their applications for benefits – and its believed most of these are due to the employer in question signing up to the TWSS administered by the Revenue Commissioners to keep the worker in employment with a wage subsidy from the State. 

Minister for Employment Affairs and Social Protection Regina Doherty said that with just over 50,000 additional payments approved last week, it was possible that they were reaching a “plateau” in terms of those on the Covid-19 payment. 

She also noted that increasing numbers of employers were participating in the TWSS, while approximately 1.4 million people are still in full time work. 

However, she acknowledged the scale of the challenge, saying: “Never before has there been such a need for welfare support from workers and employers, with more than three years’ worth of claims being processed in less than a month”.

She went on to say: “As we reach the plateau of those on income support, we hope to bend and lower that curve also – getting as many back to work as soon as possible as and when the health environment permits”. 

Around 68,000 payments have been withheld from claimants for a number of reasons, including the fact that they were still in employment, were not in employment prior to claiming, were not resident in the State, were outside the relevant ages of 18-66, or had submitted incorrect details of PPS numbers or bank accounts. 

The department is contacting claimants directly to try to resolve any issues.

According to the statistics, the labour sector with the highest number of people receiving the Pandemic Support Payment is Accommodation and Food Services (115,500), followed by Wholesale and Retail Trade (81,400) and Construction (71,000).

The department has also published the number of Covid-19 Pandemic Support claims on a county by county basis.

Dublin accounts for the biggest number of claims, at 152,700.

Cork is in second place, with 55,600, and Galway coming third with 29,100.

The lowest number of applications was from Leitrim, with 3,700.

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