Ruairi Ó Murchú (Louth, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

This issue has probably been synopsised on the basis of how badly I put the question. This question was brought to me by Paddy Malone of Dundalk Chamber of Commerce. He is an accountant and he told me that every year there is an initial 31 October deadline for submitting returns. He talked about self-employed small sole traders, namely taxi drivers and people who would be involved in trades, etc. He said a significant number of them have been impacted massively by the pandemic. Some of them have heard about the Revenue online system extension. There is generally an extension for people who submit their returns online and pay on that date and it usually happens in or around November. It was set for 12 November this year and that got extended to 10 December.

It was explained to me that the difficulty in this regard is that the guy who owes €100,000 and has no difficulty paying it, because he has the money, will leave it until the end. That is fair enough because he has the money and he can pay it. A significant number of people are under severe pressure, however, and many accountants are rushing to get returns in for them because if they get their returns in on 31 October, then they do not necessarily have to pay on that date. The problem is that some of them believe they have an extension but do not actually have one. That are worried that if they put in their returns on 10 December but cannot pay, they will miss out on their audit exemption, which might mean they have to pay more money from an accounting point of view. Also, they do not have the money up front so this needs to be dealt with as quickly as possible.

Mairead Farrell (Galway West, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

This matter was specifically raised with me by my colleague, Deputy Ó Murchú, and a number of people have contacted me about it since. They have told me the small traders are deeply concerned about this.

Specifically, accountants are worried that among those smaller businesses that are struggling there is not enough awareness of this and that they need to ensure that come 10 December their outstanding tax liabilities from the previous year are settled as well as the presumptive liabilities for the current year. While many people are happy that an extension has been granted from 31 October or, say, mid-November to 10 December, there is a concern out there that there are small businesses that are not fully aware this is the case. We have been contacted by accountants who are struggling to try to ensure they facilitate these businesses and make them aware of the issue. We believe awareness of this matter needs to be raised. We want to highlight it to the Government in the hope that something might be done or, at least, awareness might be raised. There is a fear among many accountants that if they use the extension, they might not be able to meet those needs come 10 December. This Topical Issue matter has been raised to make the Government aware of this problem and to alleviate the concerns of those accountants and smaller businesses.

Seán Fleming (Laois-Offaly, Fianna Fail)
Link to this: Individually | In context | 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.

Ruairi Ó Murchú (Louth, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

I just want to make sure I have this correct. People are worried about two things: that they will not have the money and that they will not make the 31 October deadline. Obviously, there are logistical difficulties for accountants at the minute trying to get information to Revenue on temporary wage subsidy scheme returns, etc., which has created its own difficulties. People are concerned that if they do not have the money for the 10 December scenario, they will suddenly be in difficulty and could lose tax certification or their audit protection. Small companies are also worried about 31 October and the Companies Registration Office returns from the point of view that they might lose audit exemptions. Again, the issue is the general cost of accounting that would lead to. I am very interested to ascertain, on behalf of these small-scale self-employed people or sole traders, what the position will be if they make a return on 10 December. Can they come to some sort of arrangement in respect of moneys if they do not have enough? I would like absolute clarity on that.

Mairead Farrell (Galway West, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

My colleague, Deputy Ó Murchú, has outlined the questions. It is good to see provision made for self-assessed taxpayers who would consider their income to be at least 25% lower than it was in 2019. There is concern out there that people who may have done okay in 2019-20 are in a completely different scenario now, so it is good that that is being taken into account. Other than that, I would like the clarity my colleague asked for.

Seán Fleming (Laois-Offaly, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

I will go through this because it is important. We are talking about 2019 income tax returns. It is important to put on the record that 2019 had nothing to do with Covid. These are pre-Covid liabilities due, so Covid cannot be referred to this year in respect of tax that was due in respect of last year's financial statement.

Ruairi Ó Murchú (Louth, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

I am sorry to interrupt, but the fear is the presumptive liabilities for 2020.

Seán Fleming (Laois-Offaly, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

Yes, that is the preliminary tax for this year, 2020. I ask the Deputies to bear with me on this. If a taxpayer has underpaid his or her 2019 preliminary tax liability, the balance of income tax for 2019 cannot be warehoused. However, and this is an important "however", Revenue announced last Friday, 16 October, in its electronic brief No. 190/20, that this liability can be included in a 3% reduced-interest phased payment arrangement if the taxpayer agrees this with Revenue no later than 10 December 2020. It is important to note that for amounts that cannot be warehoused, people can contact Revenue. Once they do so before 10 December, they can get in under the new 3% rate that applies to the phased payment arrangement, not technically under the warehousing system. Revenue will agree to that 3% interest rate warehousing. That is important. The warehousing of unpaid tax - we are talking about VAT, PAYE, PRSI, USC, income tax and corporation tax - will not prevent the business from obtaining tax clearance. That is the position as long as the business continues to meet its obligations for qualifying for warehousing of tax debts by filing all tax returns and paying other liabilities as they fall due. The key point here is to get one's tax returns in.

One can agree to make the payment next year, the following year or the year after. Once a person gets his or her returns in on time the Revenue Commissioners know what they are talking about and will come to the arrangement of 0% for the first 12 months and then 3% after that.

Ruairi Ó Murchú (Louth, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

That is even for 10 December.

Seán Fleming (Laois-Offaly, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

Yes, once it is in for 10 December.

Ruairi Ó Murchú (Louth, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

And they have the communications.

Seán Fleming (Laois-Offaly, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

Absolutely.