Revenue announces important extension to the Debt Warehousing Scheme to support businesses
Yesterday (17 October 2022), Revenue announced an important and significant extension to the Debt Warehousing Scheme in light of the current challenging economic situation for businesses. Under the scheme, businesses with warehoused debt were due to enter into an arrangement with Revenue to deal with that debt by the end of the year (or by 1 May 2023 for those subject to the extended deadline). Given the current economic uncertainty, Revenue has extended the timeline to 1 May 2024. This means that businesses will not now be faced with the challenge of either clearing the debt in the warehouse or entering into a phased payment arrangement to clear the debt until 1 May 2024. Importantly also, businesses will still be able to avail of the reduced 3% interest rate from 1 January 2023, as opposed to the general interest rate of 10%, when they come to pay the debt.
Commenting on the extension, Collector-General, Mr. Joe Howley, said:
“Revenue appreciates the very significant challenges that businesses are currently experiencing in meeting their tax obligations, arising from the impacts of the energy costs crisis and the financial pressures these have placed on businesses as they continue their recovery from the pandemic. This extended deadline in terms of debt remaining in the warehouse, and the ongoing availability of the reduced rate of interest of 3%, will provide businesses with greater certainty in the current economic climate and give them additional time before they have to start addressing the warehoused tax debt. Where a business has the capacity to repay any or all of the debt warehoused in the meantime, then they can of course do so.“
Revenue will write to all businesses with debt in the warehouse in early December setting out their statement of debt in the warehouse and advising them of the extension announced today. Such businesses will also be reminded of the importance of filing current returns and paying their current liabilities on time and as they arise.
Mr. Howley emphasised the importance of keeping current returns and payments up to date and early engagement with Revenue where businesses experience any payment difficulties in meeting their current tax obligations:
“Because it is a condition of debt warehousing that a business keeps current returns and payments up to date, any business that experiences a cashflow or temporary difficulty in meeting a tax liability as it arises should be proactive and make contact with Revenue as soon as such a difficulty arises. As I have said on other occasions, early engagement allows us to work proactively with the business concerned towards finding an agreed solution to those temporary difficulties. That agreed solution will, in turn, ensure that the business is able to continue to avail of the debt warehousing scheme.”
The Debt Warehousing Scheme was introduced to provide a vital liquidity support to businesses suffering a downturn due to the Covid-19 pandemic.
Statistics published by Revenue today show that the bulk of the €2.58 billion warehoused debt – €2.2 billion – is warehoused by 7,500 taxpayers and a very large cohort of taxpayers (almost 50,000) have debts of less than €5,000 warehoused.
Mr. Howley concluded:
“The Debt Warehousing Scheme has provided a valuable support for businesses and, at its height, over €3.1 billion in debt was warehoused. We are now at under €2.6 billon. There are currently just over 27,000 taxpayers with warehoused debts in excess of €5,000 and these include more than 19,000 employers who employ over 315,000 employees. The scheme continues to be important in sustaining employment and viable businesses. The extension announced today will give businesses some certainty as they head into the end of 2022 and plan for 2023 and reflects Revenue’s willingness to work with businesses to deal with the challenging economic and business environment in which they are currently operating.”
Updated Debt Warehousing Scheme statistics published earlier today are available on the Revenue Website.