David Stanton (Cork East, Fine Gael)
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218. To ask the Minister for Finance if clarity will be provided in relation a query (details supplied) regarding debt warehousing and the reduced rate of interest for outstanding non-Covid-19 debts. [10398/21]

Paschal Donohoe (Dublin Central, Fine Gael)
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The Debt Warehousing Scheme remains available to support businesses that are experiencing tax payment difficulties arising from the COVID-19 pandemic. The scheme applies to VAT debts, PAYE (Employer) debts, self-assessed income tax amounts (balance of 2019 Income Tax liability and 2020 preliminary tax) and Temporary Wage Subsidy Scheme (TWSS) overpayments.

The scheme allows businesses to ‘park’ these debts on an interest free basis for 12 months following the resumption of trading. At the end of the 12-month interest free period, the warehoused debt may be paid in full without incurring an interest charge or paid through a phased payment arrangement at a significantly reduced interest rate of 3% per annum. This compares to the standard rate of 8% or 10% per annum that would otherwise apply to such debts.

Businesses that previously availed of the Debt Warehousing Scheme and subsequently resumed trading (for example, between September and December 2020 as mentioned in the case in question), can recommence availing of the support if their trade has again been impacted by the latest restrictions. This means that they can warehouse relevant tax debts from the beginning of the initial lockdown, including in respect of the period/s during which they were trading between lockdowns. A key requirement of the scheme is that businesses continue to file all relevant tax returns for the restricted trading period(s) even if the liability cannot be paid so that the tax debt can be quantified and warehoused.

As part of the Government’s July Jobs Stimulus Package, a similar reduced rate of interest (3%) was made available on a short-term basis to encourage businesses enter into payment arrangements to clear tax debts that could not be warehoused, such as liabilities that arose prior to the pandemic. This measure was introduced to provide liquidity support for businesses and sole traders that had historic unpaid tax debts across all tax types and was available for payment arrangements agreed on or before 31 October 2020.

While this arrangement is no longer available, Revenue has advised me that it will take a reasonable and pragmatic approach where it can be demonstrated that a business has genuine difficulty in addressing tax debts and will work to agree a mutually acceptable solution where there is meaningful engagement. Revenue has also confirmed to me that if the Deputy wishes to provide the details of the case in question, it will make direct contact to discuss the difficulties and outline the possible alternatives that are available.