I propose to take Questions Nos. 223 and 235 together.
The Tax Debt Warehousing scheme was introduced in May 2020 to provide a vital liquidity support to businesses from the outset of the COVID-19 pandemic. As a further measure of support in light of the challenging economic situation that businesses continue to face, a significant extension to the scheme in October 2022 means that businesses do not have the challenge of making arrangements to pay their warehoused debt until 1 May 2024.
It is important to note that businesses do not have to pay all their warehoused debt by that date. All that is required is for businesses to proactively engage with Revenue and make arrangements to pay the debt over a period of time, based on their individual circumstances and capacity to pay.
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 this interest-free period, a reduced interest rate of 3% was to be applied either until the warehoused debt was paid or the business otherwise exited the scheme. However, on 5 February 2024, I announced that the interest rate has been further reduced to 0%, and that the necessary legislation to implement the reduction will be introduced at the next available opportunity.
Revenue has confirmed that it will operate the reduced interest rate on an administrative basis pending the legislative change. Revenue has also confirmed that, where a business has already paid warehoused debt which was subject to interest at 3%, it will receive a refund of that interest.
At the end of January 2024, a total of €1.71 billion was warehoused for 57,244 taxpayers, with 70% of the taxpayers concerned having outstanding liabilities of less than €5,000. The overall debt has decreased substantially since January 2022 when almost €3.2 billion was warehoused for approximately 105,000 customers.
This reduction in debt is largely due to online payments made by businesses on an ongoing basis as their financial circumstances permitted. Other customers availed of short-term payment arrangements to manage the payment of their debt which have now completed and their debt is paid in full. For these customers, payments made during the initial interest-free period (i.e. up to end December 2022 for the majority) did not incur an interest charge. However, the interest rate of 3% was previously applicable on payments made for warehoused debt since 1 January 2023.
In this regard, a total of 475 customers have paid €487,500 interest on payments of their warehoused debt since 1 January 2023. This results in an average of just over €1,000 to be refunded per customer. It is not possible to provide the breakdown of this amount by economic sector or by county. In the coming weeks, Revenue have confirmed they will pro-actively contact each customer directly to arrange a refund of the interest.
In addition to this, it should be noted that almost 2,200 customers are currently in active Phased Payment Arrangements (PPAs) for warehoused debt of an aggregate €169 million. When these PPAs were agreed, the interest rate of 3%, which was applicable at the time, was included in the monthly payment calculations.
To ensure that these customers benefit from the interest rate reduction, the schedule of future monthly payments for each arrangement will be recalculated and adjusted downwards to reflect the interest rate reduction. Therefore, no refund of interest is required for these customers as they will receive credit for the interest through adjustment of their ongoing payment arrangements. Over the coming weeks, Revenue will contact each customer to outline the action required by them to agree their revised payment schedule at the new 0% interest rate.
With regard to Deputy Pringle's question, I would note that at the end of January 2024 of the total remaining warehouse customers, 92% were business taxpayers with an annual turnover less than €3 million and managed by Revenue’s Business Division. Further detail on the annual turnover of companies availing of the Tax Debt Warehousing scheme in each year the scheme has operated is not available.
The following table gives details on the size of businesses currently availing of the Debt Warehouse scheme by reference to their assigned Division within Revenue, which is based on their annual Irish turnover.
|
Division
|
€m
|
Unique Customer Count
|
|
Business
|
1,053
|
52,983
|
|
Medium Enterprises
|
535
|
1,545
|
|
Large Corporates
|
104
|
60
|
|
Personal
|
12
|
2,629
|
|
Large Cases - High Wealth Individuals
|
7
|
27
|
|
Total
|
1,711
|
57,244
|
All businesses managed by Revenue’s Personal and Business Divisions qualified automatically for the Debt Warehousing scheme. Other businesses (those dealt with in Medium Enterprises Division, Large Corporates Division and Large Cases High Wealth Individuals Division) had to apply for Debt Warehousing and were approved subject to certain criteria. Revenue’s Business Division manages enterprises with an annual turnover less than €3 million, which accounts for the majority of business taxpayers. Personal Division deals with all business entities with no trade or professional income such as trusts, charities, sporting bodies. Medium Enterprises Division deals with businesses with an annual Irish turnover of more than €3 million (but less than €190 million) as well as the subsidiaries/parents of such companies. Large Corporates Division deals with the largest companies with an annual Irish turnover of more than €190 million per annum. Large Cases High Wealth Individuals Division deals with high wealth individuals.
