Dáil Éireann Debate, Tuesday - 26 July 2022
366. Deputy Louise O'Reilly asked the Minister for Finance further to Parliamentary Question No. 240 of 7 April 2022, if further projections have been made in relation to the amount of warehoused tax debt that will be collected; the amount that may not be collected; and if it is still his projection that 25% of the warehoused tax liabilities will not be repaid. [40426/22]
View answer367. Deputy Louise O'Reilly asked the Minister for Finance further to Parliamentary Question No. 240 of 7 April 2022, the number of companies that have warehoused tax liabilities that have ceased operations or existence; and the value of the liabilities lost to the Exchequer as a result. [40427/22]
View answerI propose to take Questions Nos. 366 and 367 together.
The Debt Warehousing Scheme has offered valuable and practical liquidity support to individuals and businesses, assisting them with their cash-flow during the difficult trading periods associated with the COVID-19 pandemic. The objective of the scheme is to support the long-term economic viability and survival of the participants/businesses concerned. The Deputy will be aware that, under the scheme, participants can temporarily ‘park’ certain tax debts on an interest free basis until the end of 2022, or until 30 April 2023 for businesses most impacted by the most recent public health restrictions and who are eligible for certain Covid-19 support schemes. To remain eligible for the scheme and to avail of the significantly reduced interest rate of 3 per cent per annum that applies to the repayment of the warehoused debt, returns must be filed for all periods covered by the scheme and current taxes must be paid as they fall due.
Businesses in the scheme are obliged to contact Revenue before the end of December 2022 (or April 2023 in the case of those eligible for the extension) to make arrangements for the payment of warehoused debt. This allows Revenue and the taxpayer to devise a repayment plan over an agreed duration, taking into account the taxpayer’s particular circumstances. The time frame given to businesses to repay warehoused debts will be negotiated as part of the agreement and will take account of all relevant factors including ongoing liabilities and ability to repay.
I am advised by Revenue that the total debt eligible for the Debt Warehousing Scheme since its introduction is €31.947 billion, and 256,000 businesses were eligible to avail of the scheme. However, as at 30 June 2022, 91 per cent of that debt has been paid, leaving a balance of €2.892 billion currently in the warehouse in respect of approximately 88,000 individual entities.
I know that Revenue appreciates the challenge for businesses in paying their outstanding liabilities in a difficult economic and financial climate. Revenue has consistently encouraged businesses experiencing payment difficulties to work proactively with them when such difficulties start to arise so that an agreed solution can be found to enable them work through those difficulties.
Revenue is not in a position to say exactly how many companies that are in the Debt warehousing Scheme have ceased operations or existence. However, I am advised by Revenue that €26.4 million warehoused debt has been written off for companies that have been liquidated since the introduction of the scheme.
As the Deputy is aware, my Department makes certain assumptions and projections in preparing the annual Budget and Stability Programme Update (SPU). In that regard, SPU 2022 projections made by my Department in April also incorporated the prudent assumption that 25 per cent of the warehoused tax liabilities are not repaid, i.e., that 25 per cent of the businesses that have availed of the scheme will never be in a position to repay. This is a conservative technical assumption but it is considered better to err on the side of caution in this matter.
