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Value Added Tax

Dáil Éireann Debate, Tuesday - 6 October 2020

Tuesday, 6 October 2020

Questions (283)

Louise O'Reilly

Question:

283. Deputy Louise O'Reilly asked the Minister for Finance if his attention has been drawn to the fact that processing VAT refunds on diesel for haulers has increased from three months to nine months; if his further attention has been drawn to the significant difficulties for haulers and the added difficulties of the Covid-19 crisis; and if he will make a statement on the matter. [28767/20]

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Written answers

I am advised by Revenue that under the terms of the Diesel Rebate Scheme (DRS), qualifying road transport operators submit their claims, via an online system, during the three months following when the transaction took place. Once the claims are received by Revenue, they are normally processed and paid within eight weeks following completion of the necessary validation checks.

Revenue has also confirmed to me that standard (non-DRS related) VAT Repayments across all sectors are generally processed within twenty days. However, on occasion, Revenue may require clarification or further information regarding a claim and this can delay repayment depending on the timing and accuracy of the responses received from the business. If the Deputy is aware of a claim that is awaiting payment for nine months, she should provide the information to Revenue so that the matter can be investigated.

Regarding the Deputy’s comments on the difficulties being experienced by hauliers arising from Covid-19, the Financial Measures (Covid-19) (No. 2) Act 2020 put on a statutory footing the arrangements for the deferral or ‘warehousing’ of tax debts, which is available to any businesses, including hauliers, that are impacted negatively by the pandemic.

The legislation provides that outstanding VAT and PAYE (Employer) liabilities incurred during the period of restricted trading due to Covid-19 can be deferred for twelve months after resumption of trading. Rather than the normal interest rate of c. 10% per annum on such liabilities, interest on ‘warehoused’ debts is applied at 0% during the 12 month ‘warehousing’ period and 3% thereafter until the liabilities are paid. There is currently €1.8 billion of debt ‘warehoused’ under the scheme, which is a very significant cash flow assistance to businesses.

Access to the ‘warehousing’ arrangements is dependent on all outstanding tax returns being filed and current taxes being paid on a timely basis once trading resumes. Businesses that avail of the ‘warehousing’ scheme also qualify for a Tax Clearance Certificate if they otherwise meet the normal qualifying conditions. This gives them access to other Covid-related supports, including the Employment Wage Subsidy Scheme.

As a further support measure for businesses, including hauliers, I introduced a reduced annual interest rate of 3% for certain tax debts as part of the July 2020 Jobs Stimulus Package. This rate represents a significant reduction from the standard 8% and 10% rates that normally apply to such liabilities and is applicable across all tax-heads and outstanding debts that cannot be ‘warehoused’, for example older liabilities and tax debts not associated with Covid-19. The interest rate reduction is a key incentive to businesses to bring their tax affairs into order, be tax cleared, and thereby become eligible for the other Covid-19 related supports that are available.

To avail of the reduced 3% rate, businesses are required to agree a payment arrangement with Revenue by 31 October 2020 (extended from 30 September 2020). Revenue has advised me that almost €50m of non-Covid-19 related tax debt is now covered by phased payments incorporating the reduced 3% rate.

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