The Law Society has issued further guidance to self-employed solicitors on the warehousing of tax debt announced by Revenue.

In an update, President Michele O’Boyle said the terms outlined by Revenue on 7 May were favourable for businesses.

Ring-fenced

Under the scheme, VAT and PAYE (employer) tax debts deferred while the business was unable to trade or where trading was restricted due to the COVID-19 public health measures will be ring-fenced by Revenue.

The tax body will also ring-fence debts for an additional two months after the business resumes ‘normal' trading.

Returns

The initiative covers VAT and PAYE liabilities from the end of March until two months after ‘normal trading’ resumes.

There will be no effort made to collect any of the debt involved during this period and no interest will apply.

If firms want to avail of the scheme, they will need to first quantify their tax debt by filing all relevant returns.

Concession

Revenue has also made it clear that businesses will be expected to pay current liabilities that arise during the 12-month period.

When the 12-month period is up, any outstanding debt will incur a 3% per annum interest charge. Revenue normally charges 10% on unpaid VAT and PAYE, making this a substantial concession. A business’s tax clearance will not be impacted if it avails of the scheme.

Revenue has said it will operate the initiative on an administrative basis until the necessary legislation is enacted.