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Revenue says tax debts may remain ‘parked’ as firms reopen

26 May 2021 / business Print

Revenue says tax debts may stay parked as firms reopen

Revenue has reminded businesses that have resumed trading that the Debt Warehousing Scheme is still in operation.

There is no immediate requirement to pay the tax debts that have been ‘parked’ under the scheme. 

The scheme is structured to support cash-flow as trading resumes by allowing businesses to continue to warehouse VAT and PAYE (employer) liabilities, as well as any overpayments of the Temporary Wage Subsidy Scheme (TWSS) for the initial months as restrictions are lifted.

Businesses that are re-opening shortly can continue to add their VAT and PAYE (employer) debts to the Debt Warehouse until 31 August.

These debts will then remain ‘parked’ on an interest-free basis for a year from 1 September, thereby allowing businesses to continue to trade without the payment burden.

It is only as the interest-free 12-month period comes to an end that businesses will be required to agree a future payment arrangement with Revenue for the warehoused tax debt.

Arrears

The timeframe allowed to pay the warehoused debt will be flexible and determined by the capacity of the business to pay these arrears, while also paying current tax liabilities as they arise, Revenue has said.

Collector-General Joe Howley, said: “This initiative gives viable businesses the opportunity to survive the economic shock of the pandemic and to hopefully thrive as the economy recovers.

“The warehoused tax debts can remain parked for a 12-month period. It is only at that point, more than a year down the road from now, that businesses will need to put the necessary arrangements in place to pay the warehoused debt.

Timeline

“This can be done over an extended timeline and taking account of individual circumstances by way of an agreed phased payment arrangement that will attract a very much reduced interest rate of 3%.”

Revenue confirmed that there are approximately 86,000 businesses currently availing of the scheme covering €2.3 billion in tax debt.

A key condition for businesses to continue to avail of the Debt Warehousing Scheme is that all tax returns must be filed as they fall due. This is the case even where the liability is nil.

Gazette Desk
Gazette.ie is the daily legal news site of the Law Society of Ireland