The Temporary Business Energy Support Scheme (TBESS) has been introduced by Finance Bill 2022 to assist businesses with increased energy costs over the winter months.
The scheme operates by reference to bills for the metered supply of electricity and natural gas, through electricity accounts or gas connections identified by its own meter point reference number (MPRN) or gas point reference number (GPRN).
The scheme falls under the European Commission Temporary Crisis Framework (TCF) and State aid approval has been received.
Initially, Finance Bill 2022 (as initiated) provided that the scheme would operate in respect of natural gas/electricity costs relating to the period 1 September 2022 to 31 December 2022, subject to a revision of the TCF. On 28 October, the European Commission adopted amendments to the TCF, prolonging all measures set out in the TCF until 31 December 2023. Committee Stage amendments to Finance Bill 2022 specify that the TBESS will run until 28 February 2023.
Revenue hosted a live webinar event about the TBESS on MS Teams on Wednesday, 14 December 2022. The webinar provided information about the scheme, along with an explanation of the Registration and Claim process. Revenue also addressed questions submitted from the event participants. The webinar was recorded and is available to view, along with the slides from the webinar, on the Revenue website.
Key features of the scheme
Revenue has published its Guidelines on the operation of the Temporary Business Energy Support Scheme (the TBESS Guidelines). It is expected that the TBESS Guidelines will be updated as the Finance Bill progresses through the various stages of the Oireachtas.
Who is eligible to make a claim?
Case I trades and Case II professions are eligible businesses for the scheme. Charities and approved sporting bodies that 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 TBESS.
An ‘eligible business’ must meet a number of conditions to be considered a ‘qualifying business’ entitled to make a claim for the TBESS.
A ‘qualifying business’ is defined by reference to one specific trade or profession. Where a person carries on more than one trade or profession, that person can have more than one eligible business and, where the necessary conditions are met, more than one qualifying business.
Revenue outlines the factors to consider in determining whether the business has more than one eligible business or qualifying business in the TBESS Guidelines.
The energy cost threshold test
To be a ‘qualifying business’, the eligible business must satisfy certain conditions, in particular, it must pass an ‘energy cost threshold’ to submit a claim for a claim period.
The eligible business must have experienced an increase of 50% or higher in the average unit price of its natural gas/electricity for the energy bill arising during a claim period (i.e., between September 2022 and February 2023) when compared to the average unit price in a reference period.
The ‘reference period’ is a calendar month that is 12 months prior to the claim period (calendar month) to which the relevant bill (in respect of which the eligible business wishes to make a claim) relates.
Businesses must supply details of their electricity and/or gas bills for the claim period and reference period to Revenue on ROS. The Revenue system will calculate the reference unit price and the bill unit price, based on the information supplied.
The Sustainable Energy Authority of Ireland (SEAI) will publish ‘deemed reference unit prices’ for the 2021 reference period for new businesses or new connections.
A unit price is calculated as the total bill charges (exclusive of VAT) divided by the number of units of electricity or gas (as the case may be) consumed during the period covered by the bill. A unit price must be determined for each electricity or gas bill in respect of which a claim is to be made and a unit price must also be determined in respect of each reference period. Revenue outlines how to calculate the electricity or gas unit price and provides examples in the TBESS Guidelines.
Once the eligible business has passed the energy cost threshold in relation to a particular electricity and/or gas bill, and satisfies certain other conditions, it is regarded as a qualifying business and is entitled to claim a Temporary Business Energy Payment (TBEP). The TBEP amounts to 40% of its ‘eligible cost’ (subject to a cap for each monthly claim period). Revenue sets out how the eligible cost is determined in the TBESS Guidelines.
The amount that can be claimed under the TBESS
A monthly cap for a claim period of €10,000 applies, with a higher cap of €30,000 where the business operates in multiple locations (which are not adjacent to each other) that have multiple MPRNs/GPRNs. Revenue outlines, with examples, the operation of the cap and details the overall cap per undertaking, under State aid rules in the TBESS Guidelines. Revenue’s system will calculate the amount of the TBEP due.
An overall cap on the amount of support that a business can claim under the TBESS for a single undertaking is:
Withdrawal and amendment of claims
Revenue outlines the process for the withdrawal or clawback of claims in the TBESS Guidelines. Where a business claims a TBEP and it later transpires it was not entitled to it, the business can withdraw the claim by notifying Revenue of its withdrawal and repaying the TBEP to Revenue.
Where a business claims a TBEP and it later transpires that the amount claimed exceeded the amount it was entitled to, the business can reduce the amount claimed by notifying Revenue of the reduction and repaying the excess amount that was claimed in error to Revenue.
Provided the above actions are carried out as soon as is reasonably practical, penalties and interest will not be applied.
The TBEP may be clawed back where a claim is subsequently found to be unauthorised or overclaimed. Where a claim is withdrawn, Revenue will apply penalties and interest. Publication of the list of tax defaulters under section 1086A TCA 1997 may also apply.
Revenue’s assessment can be appealed in the normal manner.
How the TBEP is treated for tax purposes
The TBEP will be taken into account when calculating the taxable trading profits of a claimant by reducing the amount of expenditure that can be deducted in arriving at taxable trading profits (i.e., expenditure which is revenue in nature and incurred wholly and exclusively for the purpose of the trade or profession).
In the case of a partnership, the TBEP is taken into account in the computation of the profits or losses of the partnership’s trade or profession.
As a TBEP reduces the amount of trading expenses that are deductible in computing the taxable income of a business, it may result in an additional tax liability where that business has trading profits for the year.
Where a business is in a loss-making position, a TBEP will reduce the amount of trading losses available for offset against future or previous profits of the business.
How to register for the TBESS and make a claim
The portal for registration for the TBESS opened on the Revenue’s Online Service (ROS) on 26 November 2022.
A business must have tax clearance to qualify for the TBESS. Many businesses intending to avail of the TBESS may not have needed a tax clearance before now and therefore, such businesses need to ensure they are up to date with their tax obligations to apply for tax clearance.
Revenue advised the Institute that a specific button for the TBESS will be made available on the electronic Tax Clearance (eTC) system to enable businesses to apply for tax clearance to ensure their eligibility for the scheme.
A business must ensure all its tax returns are filed, and payments made, or payment arrangements entered into to cover all outstanding debts. The business must continue to be entitled to tax clearance for the duration of the claim period.
Where a business has debt warehoused under the Debt Warehousing Scheme, the business will be treated as compliant for the purposes of the TBESS provided it continues to be eligible for the Debt Warehousing Scheme.
Time limit for making a claim for a TBEP
The time limit for making a claim in relation to an electricity or gas bill is 4 months from the end of the claim period to which the electricity or gas bill relates. For example, if the claim period is September 2022, the time limit for making a claim is 31 January 2023. However, in a press release on 30 January 2023 Revenue announced that it would allow businesses additional time to submit claims for September 2022.
Climate Toolkit 4 Business
When registering for the TBESS, it will be necessary to tick a box declaring that the qualifying business has completed a carbon footprint exercise and is taking steps to reduce its energy use and environmental impact. This can be carried out using the Climate Toolkit 4 Business. The guidance notes the completion of the toolkit is not a legal requirement and has no impact on the assessment of a business’ eligibility for the TBESS. The Government encourages businesses to use the toolkit as a resource to help reduce energy consumption and take other actions that can have a positive environmental impact.
Making a claim
A claim portal in respect of the TBESS is available via the eRepayment Claims system on ROS from 5 December 2022. It is important to note that the TBESS ‘Tax Head’ will only be visible to those persons who have successfully completed the TBESS eRegistration process. Qualifying businesses can make a claim for a temporary business energy payment (TBEP) for each claim period for which they meet the eligibility criteria.
There are 6 steps to making a claim:
Revenue requires records to be maintained and made available by claimants upon request. Therefore, Revenue may request a business to upload copies of the electricity or gas bills for the reference period and/or claim period.
Revenue’s TBESS Calculator can be used by businesses to enter details of current and reference period energy bills to calculate the potential amount of a payment under the scheme.
January 2023 – Important Notice about September Claims for TBESS
December 2022 – Revenue Webinar on the Temporary Energy Support Scheme (TBESS)
December 2022 – Revenue Slides of the TBESS Webinar from 14 December 2022
December 2022 – Understanding Your Bill – Sample Bills (invoices and statements)
November 2022 – Revenue ‘Understanding your bill’ guide
November 2022 – Finance Bill 2022 – Report Stage Amendments
November 2022 – Finance Bill 2022 – Committee Stage Amendments
October 2022 – Finance Bill 2022, as initiated