Dáil Éireann Debate, Wednesday - 24 April 2024
34. Deputy Carol Nolan asked the Minister for Finance if he will extend the tax warehousing scheme for the farm and forestry contractors’ sector in Ireland, which has been the most severely impacted by the bad weather since September 2023 and now faces huge cashflow difficulties due to the late spring sowing season; and if he will make a statement on the matter. [18207/24]
Amharc ar fhreagra35. Deputy Claire Kerrane asked the Minister for Finance if consideration is being given to allowing an extension to the tax warehousing scheme for agricultural and forestry contractors, given concerns from the sector around financial and weather constraints on work activity in the agricultural and forestry contractor sector in Ireland; and if he will make a statement on the matter. [18258/24]
Amharc ar fhreagraI propose to take Questions Nos. 34 and 35 together.
The Tax Debt Warehousing Scheme was introduced in 2020 was introduced to provide vital liquidity support to businesses impacted by Covid-19 trading restrictions. The scheme allowed for the deferral of collection of certain tax liabilities relating to Period 1, the “Covid-19 restricted trading period”. The tax liabilities that could be deferred (or “warehoused”) were VAT, PAYE (Employer) liabilities, excess Temporary Wage Subsidy Scheme (TWSS) and Employment Wage Subsidy Scheme (EWSS) payments due to be refunded to Revenue by employers, and certain self-assessed income tax liabilities.
Period 1 was generally available up to 31 December 2021 although, for certain sectors (in particular entertainment, hospitality and tourism) which were subject to further COVID-19 trading restrictions, it was extended until 30 April 2022. As such, the period for which liabilities could be entered into the warehouse ended for all businesses almost two years ago.
Following the end of Period 1, businesses were afforded a period of 12 months (“Period 2”) during which there was no requirement to make any payment of the warehoused liabilities and no interest applied for the duration of Periods 1 and 2.
Period 3, the “reduced interest phase” runs from the end of Period 2, that is, either 1 January 2023, or 1 May 2023 for businesses which qualified for the extension, until the warehoused liabilities are paid in full or the customer otherwise exits the scheme.
Several changes have been made to the Scheme to assist businesses; for instance, a reduced interest rate of 3 per cent applied to warehoused debt in Period 3, however, on 5 February 2024, I announced that this interest rate would be reduced to 0 per cent. This change was made in light of the unique nature of the warehoused debt, and in order to further support otherwise viable businesses.
Furthermore, Revenue announced a significant extension to the Scheme in October 2022, in response to the challenging economic situation arising from the energy cost crisis. At that point, businesses with warehoused debt were due to either pay the warehoused debt or enter into a Phased Payment Arrangement (PPA) with Revenue by 31 December 2022 (or by 30 April 2023 for those in the extended scheme). Given the economic uncertainty at the time, Revenue extended this timeline to 1 May 2024.
Revenue will work with taxpayers and support them in managing the payment of the debt. Customers are not required to pay all of their warehoused debt by 1 May 2024, however, in order to avail of the 0 per cent interest and flexible payment options, they are required to engage with Revenue ahead of that date to make arrangements to pay the debt over an agreed period of time.
At end-March 2024, €1.65 billion remained outstanding in respect of 55,490 individual taxpayers. Approximately 70 per cent of customers with debts in the warehouse owed amounts less than €5,000. The bulk of the debt (€1.41 billion) was warehoused by 5,040 customers with outstanding balances greater than €50,000. As of 22 April 2024, Revenue has advised that there were 2,876 customers from the “Agriculture, Forestry and Fishing” sector availing of the Debt Warehouse with aggregated debt of €15.8 million, however it is noted that the categories under that heading do not align with farm and forestry contractors per se.
Revenue has confirmed to me that it is firmly committed to supporting viable businesses and has taken a flexible and pragmatic approach to the payment of warehoused debt having regard to the financial circumstances of each business and their capacity to pay. During the pandemic, Revenue made a number of changes to its online PPA facility to provide ongoing support to business experiencing cash flow difficulties. These changes include a reduced down payment to commence the arrangement, availability of an extended payment duration and, where necessary, the availability of payment breaks and payment deferrals if temporary cash flow difficulties arise during the term of the arrangement.
More recently, Revenue further streamlined the PPA application process for business by increasing the threshold to upload supporting documentation from €5,000 to €50,000, thereby reducing the administrative burden on business.
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.
Revenue fully appreciates that there may be circumstances where businesses continue to experience cash flow difficulties, impacting either their ability to pay non-warehoused debt, or their ability to meet ongoing tax obligations on a timely basis. The advice remains that businesses should engage with Revenue as soon as such difficulties start to arise so that an agreed solution can be found.
In the case of a seasonal business, the option of a lower down payment and a payment break may be appropriate to alleviate the temporary cash flow difficulty for the business. These options can be considered on a case-by-case basis to suit the individual business circumstances and their capacity to pay, once the business engages with Revenue and submits their payment proposal. Revenue has a proven successful track record in supporting businesses with cash flow difficulties, by agreeing flexible PPAs that take account of the financial circumstances of each business and their capacity to pay.
