Revenue defends use of SCARP opt-outs
Revenue has reiterated what it describes as its “full support” for a scheme designed to provide a more cost-effective restructuring process for smaller companies.
In a statement, the tax authority has also defended its use of an opt-out provision in the Small Company Administrative Rescue Process (SCARP) in some circumstances.
The legislation provides Revenue with a structured right, under section 558L (4) of the Companies Act 2021, to opt out of SCARP arrangements.
‘Legal safeguard’
The tax body says that the opt‑out is designed “not as a veto, but a legal safeguard designed to ensure that the integrity of the SCARP process is not misused to evade tax liabilities”.
Pointing out that the “vast majority” of companies have met the inclusion criteria since SCARP was introduced in December 2021, Revenue adds that it has exercised its opt-out in only 19 of the 99 applications.
That tax authority says that it will exercise its opt-out right only under “clearly defined circumstances”:
- Where Revenue cannot quantify the debt because of outstanding returns or other relevant information, there is an ongoing audit or intervention, or there is an active tax appeal, or
- Where the company or directors have a track record of non-compliance or poor compliance.
“Recent commentary has suggested that Revenue’s ability to opt out of SCARP may deter directors from entering the process,” the statement says.
‘Constructive partner’
“The only reason why a director of a company might be discouraged by the potential for Revenue to opt out is if they anticipate legitimate concerns being raised.
“For directors acting in good faith and seeking to restructure a viable business, SCARP remains a valuable and supported option,” the tax body states.
“Businesses that act early, engage openly, and address compliance issues will continue to find Revenue a willing and constructive partner in achieving a successful rescue,” the statement concludes.
Figures earlier this week from professional-services firm Azets Ireland reported a 15% rise in the number of firms availing of the scheme in the first six months of 2025 compared with the same period last year.
Some commentators, however, had previously expressed concern about the low take-up of the scheme.