The Temporary Business Energy Support Scheme (“TBESS”) was announced on Budget Day to assist businesses with increased energy costs over the winter months.
The claim periods for the scheme are currently the calendar months between 01.09.22 to 31.12.22, however there is an indication that the scheme may be extended to 28.02.23.
Each calendar month is to be a separate claim period, and claims must be made no later than 4 months after the end of the claim period. There will be 4 separate claims, one for each month. It is possible to qualify for one month and not for another.
The scheme is open to a person or businesses that:
- Are Tax Compliant, (thus eligible for tax clearance)
- Carry on a Case I trade or Case II – (a person that carries on a trade or profession, solely or in partnership and that is chargeable to tax under Case I or Case II is an “eligible business” within the scope of the scheme). Charities and approved sporting bodies who carry on certain activities which would be chargeable to tax under Case I or Case II, but for an available exemption, are also eligible for the scheme
- Have experienced a significant increase of 50 per cent or more in their natural gas and electricity average unit price between the relevant bill period in 2022 (September to December) and corresponding month in 2021
The scheme operates with reference to bills for metered supplies, the electricity/gas supply must be from a licenced supplier to a final customer and to an account for which a Meter Point Reference Number (MPRN) has been assigned in respect of electricity or a Gas Point Reference Number (GPRN) in respect of natural gas.
An eligible business must meet the “energy cost threshold” to qualify to make a claim for a claim period.
The threshold is calculated by comparing the VAT-exclusive unit price from their bill for electricity/gas e.g., comparing 01.09.22 to 30.09.22 with 01.09.21 to 30.09.21, if this has increased by at least 50%, the business is eligible to submit a claim.
In circumstances where a business has not been issued with an electricity/gas bill for the reference period, (as the connection to the supply did not exist or was not held by that eligible business at any time during the reference period), a deemed reference unit price for a reference period will be made available by the Sustainable Energy Authority of Ireland for such circumstances.
Payments made under the scheme is called a “Temporary Business Energy Payment” and is computed as 40% of the increase in electricity/gas costs with the relevant formulae outlined in the legislation.
The calculation is not straight forward…
Claims are capped at €10,000 per trade per claim period. However, if the business operates across several locations and has multiple MPRN/GPRN with separate addresses (that are not adjacent to each other) a claim of €10,000 per MPRN/GPRN up to a maximum of €30,000 per claim period applies. In other words, if there are 4 hotels operating in a single company the maximum claim that company could claim would be €30,000.
There is an overall cap on support per undertaking of €500,000. A lower cap applies to businesses engaging in farming (capped at €62,000) and fishing (capped at €75,000). This really means that groups and connected parties are limited to €500k claim over all the businesses.
Businesses must comply with Revenues requirements regarding registering and submitting claims via ROS.
The Bill provides for a claw back for invalid claims and overclaims. Penalties may apply.
The Bill provides for publication of the details of scheme claimants by Revenue.
In computing the profits or gains of a trade or profession for a chargeable period, deductible expenses under section 81 TCA 1997 must be reduced by the amount of the payment under the scheme for the claim period – this means that essentially the payment is taxable.
The scheme falls under the European Commission Temporary Crisis Framework (TCF) and is subject to State aid approval before payments can be made under the scheme.
Some further technical points
- Each business who applies will have to declare that the business has completed a carbon footprint exercise and is taking steps to reduce energy use.
- The total gas and electricity taken into account will include the standing charge and PSO levy or carbon tax less any discounts or credits. Previous months underpayments will not be taken into account.
- The actual calculations are quite complicated, but Revenue’s system should do all the hard work. The complexity will be due to the actual billing period. If the billing period is each month, then its very straight forward but this will rarely happen. If a billing period covers the entire month plus other months, then that is the bill you base the calculation on. However, if there are 2 bills for the one month then the 2 bills will be needed to do the calculation. For instance, if the billing period is 15 August to 15 October, then this is the bill required for the September period. The October period will include the 15 August to 15 October bill but also the 15 October bill to 15 December bill.
- You need to calculate the price per unit as opposed to the total bill cost – but Revenues system should work this out for you once you have figured out the correct bills to use. The billing periods could differ from 2021 to 2022 which will further complicate matters.
Over the coming week or so we will issue some examples as to how the calculations work, however in the meantime see the following link from Revenue which goes into some detail.
In the meantime should you like to discuss any part of the scheme, please feel free to contact your usual Quintas advisor.