Dáil Éireann Debate, Tuesday - 16 April 2024
232. Deputy Jennifer Murnane O'Connor asked the Minister for Finance the changes that are being considered to the debt warehousing scheme to support private businesses availing of the scheme; and if he will make a statement on the matter. [16605/24]
View answerThe Tax Debt Warehousing scheme has provided vital and practical liquidity support to businesses by assisting them with their cash-flow during difficult trading periods. The Scheme allowed businesses to temporarily defer VAT and Employer PAYE, certain self-assessed income tax liabilities, and Temporary Wage Subsidy Scheme and Employment Wage Subsidy Scheme overpayments on an interest-free basis for an extended period of time until end-December 2022, or end-April 2023 for those in the extended scheme.
After that interest-free period, a reduced interest rate of 3 per cent was to be applied until either the warehoused debt was paid or the business otherwise exited the scheme. However, on 5th February, I announced that this interest rate has been reduced to 0 per cent.
This change has been made in light of the unique nature of the warehoused debt, and in order to further support otherwise viable businesses which were impacted by public health restrictions during the pandemic. While the necessary legislation will be introduced at the next available opportunity, in the interim Revenue has confirmed that it will operate the reduced rate on an administrative basis.
Revenue has also confirmed that it has started the process of refunding any taxpayers who have already paid the 3 per cent interest rate in respect of warehoused debt and that it has contacted customers who have entered a Phased Payment Agreement (PPA) to adjust the terms of their PPA to take account of the 0 per cent interest.
At end-March 2024, €1.65 billion of warehoused debt was owed by 55,490 individual entities, with 70 per cent of those customers having outstanding liabilities of less than €5,000. Revenue has issued letters to taxpayers with warehoused debt to outline their payment options, with further outreach and communications campaigns planned.
Businesses availing of the scheme are required to engage with Revenue by 1 May 2024 to make arrangements to pay the debt over an agreed period of time, based on their individual circumstances.
Revenue has advised that their approach will be flexible in relation to payment plans on warehoused debt, having regard to the financial circumstances of each case and the customer's capacity to pay. These flexibilities include the possibility to extend the duration of payment arrangements beyond the typical three to five-year duration. In addition, Revenue has confirmed that an initial down payment may not always be required upon commencing a payment arrangement.
Revenue has also advised that a number of additional flexibilities are available to address any payment difficulties that may arise during the term of the payment arrangement, such as options to take a payment break, deferral of next payment due, amendment to payment date and amendment to monthly payment amounts.
It remains a key condition of the scheme that businesses continue to file their current tax returns and pay current liabilities as they fall due. By doing so, businesses will benefit from the 0 per cent interest rate and flexible payment options available in respect of warehoused debt. The consequence of not meeting these conditions is that the warehouse facility is revoked, which will result in the standard interest rate of 10 per cent applying and the immediate enforcement of all outstanding debt, including interest.
Where businesses are experiencing cashflow difficulties impacting their ability to meet ongoing tax obligations on a timely basis, the advice remains to engage with Revenue as soon as such difficulties start to arise, so that an agreed solution can be found. 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.
