FDC: Does your farm qualify for assistance from new Business Energy Support Scheme?

UNDOUBTEDLY, a welcome feature of the recent Finance Bill was the introduction of a €1.25bn support to businesses impacted by the current unprecedented rise in energy prices due to the conflict in Ukraine.  

While this measure is subject to State aid approval under EU rules, prior to any payments being made under the scheme, here’s what we know so far about the Temporary Business Energy Support Scheme (TBESS). It will be administered by Revenue, similar to the numerous Covid-related support schemes of recent years and it will operate as a cash payment to qualifying businesses.  

Such businesses, referred to as ‘eligible businesses’, include those carrying on a trade or profession chargeable to tax, along with sporting bodies and charities which, but for a tax exemption, would be chargeable to tax.  

Businesses which are engaged in passive activities such as rental or investment activities will not qualify for this scheme.

The scheme will apply to electricity and natural gas costs for the period from September 1st 2022 to December 31st 2022 with a possible extension (subject to EU rules) up to February 28th 2023.  

In order to qualify, businesses must show an increase in the average unit price of electricity or gas of at least 50% from the equivalent period in 2021. This minimum is referred to as the ‘energy costs threshold’.  

Once this threshold has been passed, a business will be considered a ‘qualifying business’ subject to certain other conditions being met.  These conditions require that the business is fully tax compliant and is eligible for a tax clearance certificate.  

A qualifying business will be entitled to claim a Temporary Business Energy Payment (TBEP) equal to 40% of the increase (over the same period in 2021) in energy costs subject to a monthly cap of €10,000 per trade or profession (with a possible increase of €10,000 per trade for a business with multiple locations up to a maximum of €30,000). There is an overall limit on the relief of €500,000 which will apply per business (or €62,000 in the case of farmers and €75,000 in the case of trades related to fishing and aquaculture).

A claim for a TBEP must be made within four months of the end of the period to which the energy bill relates.  It is expected that businesses will be able to make a claim through the Revenue Online Service (RoS) by the end of this month.The scheme will operate on a self-assessment basis and businesses will be required to keep supporting documentation in case of future Revenue eligibility checks.  

The above is merely a brief overview of the operation of the scheme. As ever, with such schemes there is quite an amount of detail and procedures to go through to establish whether your business is eligible before making a claim, it is advisable to contact your tax advisor in this regard.

• Siobhan Healy, is a tax advisor with FDC’s tax department in Bandon.