Seán Fleming (Laois-Offaly, Fianna Fail) | Oireachtas source

I thank Deputies Ó Murchú and Mairéad Farrell for raising this issue because it is one that is very current to many small business persons and even larger businesses. The provision for tax warehousing, which is in itself a good measure, allows people time to pay on a cash flow basis at no interest in the first period.

Since the outset of the pandemic, Revenue has been mindful of the pressures on businesses and has taken steps to enable them to cope with the restrictions. Revenue has stressed that businesses that are having difficulty should continue to file their returns and that if they are encountering difficulty making payments they should contact the unit dealing with their tax affairs in order to put arrangements in place. Since March, Revenue has allowed businesses to warehouse VAT liabilities from the January-February 2020 VAT period onwards and PAYE liabilities from the February 2020 income tax month onwards.

Revenue has recently stated in its frequently asked questions document on debt warehousing that if a business was able to reopen when restrictions eased in the summer but has had to close again due to the reimposition of restrictions, the warehousing of tax debts, including VAT and PAYE liabilities incurred while the business was temporarily reopened, can continue until the new restrictions are lifted and the business reopens again. Businesses that are eligible to warehouse debts can warehouse amounts up to two months after reopening, pay no interest on these debts for a further 12 months and pay a reduced rate of 3% per annum on these debts until they are paid off. To qualify for tax warehousing, businesses must continue to file their returns in a timely manner. This does not mean they must pay off the debts; it just means they must file the returns.

The Minister for Finance announced in the Budget Statement that tax debt warehousing is now being extended to excess payments of the temporary wage subsidy and to this year's income tax payments. Full details of these measures will be provided in the finance Bill which is expected to be published in the coming days. I will repeat that. Payments in respect of this year's income tax payments will be included in the warehousing provisions in the finance Bill to be brought before the House in the coming days.

Another measure already taken has been to provide for a reduced rate of interest on pre-Covid liabilities. Section 6 of the Financial Provisions (Covid-19) (No. 2) Act provides that outstanding pre-Covid-19 tax liabilities would be subject to an interest rate of 3% per annum where the taxpayer applied to make a phased payment arrangement with Revenue. This is a reduction from the normal interest rate of 8% or 10% per annum, depending on the tax in question. The scheme applies automatically to existing phased payment arrangements. The legislation which provided for this measure set a deadline of 30 September 2020 to apply for a phased payment arrangement. Revenue has extended the date for finalising the phased payment arrangement to 31 October 2020. This was announced on 1 October 2020 in a brief issued on the Revenue website.

As mentioned, budget 2021 provided for the extension of the tax debt warehousing scheme to cover the balance due on 2019 income tax liabilities and 2020 preliminary tax. The warehousing of income tax will apply to any self-assessed taxpayer - that is, all the small businesses and the people the Deputies referred to - who expects his or her income for 2020 to be at least 25% lower than his or her income for 2019 as a result of the Covid restrictions. In the case of taxpayers who were not chargeable persons last year, warehousing may apply to preliminary tax liabilities for 2020 where the taxpayer contacts Revenue advising it that he or she is unable to pay his or her liabilities as a result of Covid restrictions.

The date for filing tax returns for 2019 and paying preliminary tax for 2020, as provided for in the legislation, is 31 October 2020. As the Deputies mentioned, Revenue has extended this date to 10 December. This is four weeks later than the normal deadline of mid-November. If the Deputies have any further comments, I will try to deal with them.

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