Ms Anne-Marie Walsh:

On behalf of my colleagues from the Department of Finance I thank the Chair and the committee for the invitation to discuss temporary supports for businesses coming under the remit of the Department, in particular the temporary business energy support scheme, TBESS, and debt warehousing.

I will begin by outlining the TBESS which was announced in budget 2023 and introduced in the Finance Act 2022. It was aimed at assisting businesses over the 2022-23 winter period with the increase in energy costs caused by the Russian invasion of Ukraine. The scheme was funded by the Department of Enterprise, Trade and Employment and was administered by Revenue. The Department of the Environment, Climate and Communications provided costings for the scheme. It was difficult to estimate at the time of inception but based on the trajectory of energy prices at that time, the scheme was expected to cost up to €1.2 billion. The scheme was designed to fall within the parameters of the EU temporary crisis and transition framework for state aid measures. Accordingly, state aid approval for the scheme was required before it could be commenced.

The scheme provided support for businesses that carried on a trade or profession chargeable to tax under Case I or Case II of Schedule D, including self-employed individuals, companies and partnerships.

Charities and sporting bodies that carried on certain activities were also included in the scheme.

The scheme operated by reference to bills for the metered supply of electricity and natural gas. Originally, to be eligible to make a claim, a business had to demonstrate that the average unit price for electricity or gas on the relevant bill had increased by 50% or more as compared to the average unit price in a reference period in addition to satisfying a number of other conditions. Once eligible, the business was entitled to claim a payment amounting to 40% of its eligible cost, subject to a cap for each monthly claim period.

Following a review in early 2023, the scheme was extended by ministerial order to 30 April 2023. The Finance Act 2023 further extended, and made a number of enhancements to, the scheme. These included a reduction in the energy cost threshold to 30%, an increase in the amount of the payment to 50% of eligible costs and an increase in the monthly caps a business could claim. The scheme opened for registration on 26 November 2022 and for claims on 5 December of that year. Payments began once the scheme was commenced following the passing of the Finance Act in mid-December 2022. The scheme ended on 31 July 2023 and businesses had until 30 September 2023 to submit their claims. While costing much less than originally anticipated, largely due to the reversal in the trend in energy prices, €153.8 million was paid to 25,300 businesses across the country under the scheme.

I now move on to the temporary debt warehousing scheme, which was announced by the Government in May 2020 to provide a vital liquidity support to businesses suffering a downturn due to the Covid-19 pandemic. The scheme initially applied to VAT and employer or PAYE liabilities accumulated by businesses during the pandemic. It was later expanded to include certain self-assessed income tax debts and overpayments of the wage subsidy schemes. On its introduction, the scheme provided that no interest would be charged on tax debts for the initial Covid-19 restricted trading period or 12 months thereafter. Interest would then be charged at the reduced rate of 3% until the debt was repaid.

In June 2021, the Government agreed that the period during which debts could be warehoused would be extended to the end of 2021 with no interest chargeable during 2022. A further extension was agreed in December 2021, allowing businesses eligible for the main Covid support schemes to warehouse debt up to 30 April 2022, interest-free until 30 April 2023. The various legislative changes have been outlined in the briefing document provided.

In October 2022, in light of the challenging economic situation for businesses, Revenue announced an extension to the scheme. As a result, businesses now have until 1 May 2024 to make arrangements to pay their warehoused debt. Last week, the Minister for Finance announced that the 3% interest rate applying to the debt will be reduced to 0%. The necessary legislation will be introduced at the next available opportunity, and in the interim Revenue has confirmed that it will operate the reduced rate on an administrative basis.

The total debt in the warehouse has decreased substantially since January 2022, when more than €3 billion was warehoused for more than 100,000 customers. By 31 January 2024, a total of €1.71 billion was warehoused for 57,244 customers, of which 70% have outstanding liabilities of less than €5,000. The scheme is administered by Revenue, which is actively managing the warehoused debt and engaging with taxpayers.

For businesses seeking information on either scheme, comprehensive information is available on the Revenue website, as well as statistical data. I hope that this overview and the briefing papers provided to the committee members are of assistance in framing discussion at this meeting, and we are happy to engage with any questions from members.