Louise O'Reilly (Dublin Fingal, Sinn Fein)
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93. To ask the Minister for Finance if the tax debt warehousing scheme will cease when the public health restrictions are lifted; the way changes to the scheme will be conveyed to businesses; and if he will make a statement on the matter. [26832/21]

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 and will not cease when public health restrictions are lifted. The liabilities being warehoused will be subject to lower interest rates (0% for the first 12 months and 3% per annum thereafter) until the liabilities are paid.

The scheme allows for the deferral of collection of certain tax liabilities relating to “Period 1”. The liabilities that may be deferred or “warehoused” are VAT, PAYE (Employer) liabilities, overpayments of Temporary Wage Subsidy (“TWSS”) due to be refunded to Revenue by employers and certain self-assessed income tax liabilities.

Period 1 for income tax warehousing is linked to the income tax pay and file date. In the case of VAT, PAYE (Employer) liabilities and overpayments of TWSS, Period 1 is linked to the date on which a business recommences trading. This date may be the date on which a business ceases to be subject to restrictions provided for in regulations made under sections 5 and 31A of the Health Act 1947, or where a business does not recommence trading following the easing of restrictions, the date on which it reopens, following the lifting of restrictions.

As stated, warehousing of tax debts will not cease immediately following the lifting of restrictions or the recommencement of trading. Warehousing for VAT, PAYE (Employer) liabilities and overpayments of TWSS allows taxpayers to warehouse liabilities in respect of a further full bi-monthly VAT period following the recommencement of trading. This is to allow businesses additional time to get back on their feet after reopening. Depending on when restrictions are lifted, this may permit warehousing of liabilities for over three additional months after a business recommences trading (for example, where a business recommenced trading on 17 May 2021, liabilities relating to May, June, July, and August 2021 may also be warehoused).

Although no further liabilities may be warehoused after the expiration of Period 1, businesses are not required to make payment of any warehoused liabilities at this time. Following the end of Period 1, businesses are afforded a period of 12 months (“Period 2”) during which there is no requirement to make any payment of the warehoused liabilities and no interest will arise. However, this is conditional on the business filing and paying current liabilities as they fall due.

In “Period 3”, the final period of the scheme, payment of warehoused debt will start and the debt will attract a reduced interest rate of 3% per annum (compared to 8% for income tax and 10% for the other taxes in the scheme) until payment has been made in full. To avail of the reduced interest rate, businesses in the scheme are obliged to contact the Collector-General before the end of Period 2 to agree arrangements for the payment of warehoused debt. This allows the Collector-General and the taxpayer to devise a tailored repayment plan over an agreed duration, that takes account of the taxpayer’s individual circumstances. The terms of the agreement must also provide that current liabilities are met as they fall due.

I want to assure the Deputy, and businesses availing of the warehousing scheme, that Revenue have been very proactive in helping businesses through the pandemic. At the very outset of the pandemic Revenue suspended enforcement action and debt collection; this then evolved into the unprecedented initiative to introduce debt warehousing. The sole purpose of these initiatives was to give viable businesses the opportunity to survive the economic shock of the pandemic and to help as many as possible to survive and hopefully thrive as the economy recovers. The scheme is also structured to support cash-flow as businesses re-open by allowing the businesses to warehouse PAYE and VAT liabilities for the initial months as restrictions are lifted, as set out earlier. The scheme then provides a further year at zero interest rates to allow the businesses solidify their recovery.

Taxpayers availing of debt warehousing are contacted regularly by Revenue to advise them of the liabilities warehoused and their obligations under the scheme, which include the filing of all required returns and payment of other liabilities. More generally, throughout the pandemic, Revenue has provided advice and updates to taxpayers and their agents through the Revenue website, press releases and e-Briefs. I refer the Deputy in particular to the information booklet available on the Covid-19 hub on the Revenue website.