Over the past few days employers who availed of the Wage Subsidy Scheme (WSS) have started to receive payments from Revenue. Employers need to be aware that they are likely to receive overpayments from Revenue, particularly in the period up to 20th April 2020, which has been called the “Transitional Phase”.
The WSS payments are automatically triggered on making a payroll submission to Revenue. To make the submission employers, or their payroll providers, first have to calculate the subsidy due in respect of each employee in accordance with the scheme rules – if you use payroll software it will assist – and add it to the payroll using the designated PRSI Class J9. Any top-up payment by the employer is then input. Once all entries are made the payroll is processed and submitted to Revenue, producing payslips and the net pay amounts to be paid to each employee. As the subsidy is not taxed (at this point – but importantly it will be at a later date) it is likely that the payroll will generate tax refunds for most employees, and where it does these refunds will be included in the employee net pay. The employer goes ahead and pays their employees their net pay, inclusive of any calculated subsidy, and any tax refunds due.
The Revenue then pays the employer, usually within two days of submitting. This payment will include:
1. Wage Subsidies
A subsidy of up to €410 per week per employee in the scheme calculated in accordance with the scheme rules. Importantly, during the transitional phase, regardless of the subsidy actually paid to each employee per the scheme rules, Revenue will automatically pay employers a flat rate of €410 per week per employee – effectively overpaying the employer for any employee not getting the maximum subsidy. This is a temporary arrangement whilst Revenue get their systems operational. The employer is obliged to hold any excess subsidy payment received – it is effectively a timing difference which will either be taken into account by Revenue when paying future subsidy payments to the employer, or will have to be repaid directly to Revenue.
The employer payment may also include:
2. Employee Tax Refunds
As previously mentioned the subsidy paid to the employee is not subject to income tax through the payroll, and it is highly likely to generate a tax refund for the employee. As these amounts will have been paid to the employees with their net pay, the employers will receive a refunds for the amounts paid to their employees.
3. Payroll Deletions/Amendments
Revenue have warned that once a payroll submission is made to them it is extremely important that the submission is not subsequently deleted or amended. They have stated that as their systems were developed quickly to cater for the WSS, attempts to delete or amend previous refund submissions may cause difficulties for the employer and disrupt the refund process. In practice we have found that amendments or deletions have resulted in duplicate payments to the employer, which will have to be repaid to Revenue.
Where you do need to amend or delete a submission Revenue recommend you first send a detailed message through myEnquiries seeking further instructions.
Currently these Revenue refunds are paid as a single sum to the employer, and Revenue is not yet in a position to provide a breakdown with the payment.
It is therefore important, that for each payroll submission, employers:
1. Keep a record of the employee WSS subsidies due;
2. Keep a record of the employee tax refunds due;
3. Reconcile the subsidies and refunds due to the payments received, identify and document any discrepancies found – whether due to deletions/amendments or not ; and
4. Retain any overpayment received until Revenue confirm how it is to be allocated against future entitlements or repaid to them.