Joe Flaherty
Question:140. Deputy Joe Flaherty asked the Minister for Finance if he will be introducing new measures for the warehousing of tax debt; and if he will make a statement on the matter. [4443/24]
View answerThursday, 1 February 2024
Questions (140, 141)
Pádraig O'Sullivan
Question:141. Deputy Pádraig O'Sullivan asked the Minister for Finance if he plans to address the difficulties that businesses are facing with regards to warehouse debt; and if he will make a statement on the matter. [4589/24]
View answerWritten answers
I propose to take Questions Nos. 140 and 141 together.
The Tax Debt Warehousing Scheme has offered valuable and practical liquidity support to businesses during the COVID pandemic and continues to support businesses as they recover from the impacts of the pandemic and the cost of living crisis. It has assisted businesses with their cash-flow during difficult trading periods, preventing business failure.
Introduced in May 2020, the scheme allowed businesses to temporarily defer VAT and Employer PAYE, certain self-assessed income tax liabilities, and Wage Subsidy Scheme and Employment Wage Subsidy Scheme overpayments on an interest-free basis for an extended period of time, up to 31 December 2022; or until 30 April 2023 for those availing of the extended scheme. After that period, a per cent interest rate applies until the debt is either repaid or the customer otherwise exits the warehouse.
A significant extension to the scheme in October 2022 ensures that businesses do not have to address their warehoused debt until 1 May 2024. Whilst payments can be made in advance, it is important to note that businesses do not have to pay all their warehoused debt by that date. Instead, they are simply required to engage with Revenue to make arrangements to pay the debt over an agreed period of time, based on their individual circumstances and capacity to pay.
A key qualifying condition of the scheme is that all current liabilities are filed and paid on time.
The total debt in the warehouse has decreased substantially since January 2022 when over €3 billion was warehoused for over 100,000 customers. By 26 January 2024, a total of €1.72 billion was warehoused for 57,435 customers, per cent of which had outstanding liabilities of less than €5,000. The bulk of the debt (€1.47 billion) was warehoused by 5,265 customers with outstanding balances greater than €50,000. Furthermore, 2,176 customers had warehoused debt of €168 million included in a Phased Payment Arrangement (PPA) with Revenue.
In advance of the 1 May deadline, Revenue has begun directly engaging with all customers with remaining warehoused debt to advise them of their debt position and highlight again the payment options available to manage their warehoused debt, including a flexible, tailored PPA. This will enable businesses to secure their viability into the future while still meeting the requirements of the Tax Debt Warehousing scheme.
Revenue has advised that their approach will be flexible in relation to the agreement of payment plans for warehoused debt. Where there is meaningful and proactive engagement, Revenue will work with businesses and give them every possible support in managing the payment of the debt over a timeline that suits the individual circumstances of the business.
If there is a change in circumstances during the term of the PPA, a number of additional flexibilities are available to address any payment difficulties that may arise such as options to take a payment break, deferral of next payment due, amendment to payment date and amendment to monthly payment amounts. However, this flexibility is subject to the key requirement of the scheme that current liabilities continue to be filed and paid on time.
Revenue has begun holding informational events/webinars for business representative bodies and sectoral groups to further raise awareness and engage with businesses with warehoused debt, particularly businesses in the SME and hospitality sectors. For example, Revenue has partnered with the Small Firms Association and the Local Enterprise Network and delivered a webinar on 17 January outlining businesses obligations in respect of both warehoused and current liabilities, and the full range of payment options and flexibilities available. On 30 January, Revenue held a similar webinar for the Restaurants Association of Ireland and their members.
Given the unique nature of the debt, and in order to further support otherwise viable businesses which were impacted by public health restrictions during the pandemic, I have engaged with Revenue with a view to examining where further flexibility might be given to businesses in repaying warehoused debt. This work is underway by Revenue and my Department and I hope to make a further announcement on this matter soon.
In the meantime, as always, where taxpayers are finding it difficult to meet their tax payment obligations, the advice remains to engage with Revenue as soon as such difficulties start to arise so that an agreed solution can be found. Revenue’s expectation is that, with proactive and meaningful engagement from businesses, flexible payment arrangements will assist most businesses to agree a realistic payment plan suitable to their specific circumstances and will satisfactorily address the payment of their debt over an acceptable period of time, giving certainty to businesses, ensuring their viability and minimising business failure.