Mattie McGrath (Tipperary, Independent)
Link to this: Individually | In context | Oireachtas source

152. To ask the Minister for Finance if he and his Government will instruct the Revenue Commissioners, and by extension Revenue sheriffs, to place a suspension on the reported avalanche of revenue debt enforcement referrals, pertaining to the collection of tax debt on SMEs until at least the end of 2023, given that small businesses are struggling with the fallout from forced pandemic lockdowns and are now dealing within an energy costs crisis; and if he will accept that pursuing this debt enforcement would cause many otherwise viable businesses to fail, with wide-scale job losses for tens of thousands of small Irish businesses and their employees. [51439/22]

Paschal Donohoe (Dublin Central, Fine Gael)
Link to this: Individually | In context | Oireachtas source

One of the primary functions of Revenue is the collection of tax and ensuring that all taxpayers pay the correct amounts due in a timely manner. Revenue’s clear preference is always to engage with taxpayers and businesses and, where possible, to agree mutually acceptable payment arrangements in preference to deploying debt collection/enforcement sanctions. However, where there is no meaningful engagement, then Revenue has no alternative but to use its enforcement powers to protect the Exchequer and maintain a “level playing field” for the vast majority of taxpayers who meet their tax obligations on time.

During the COVID-19 pandemic, Revenue strongly supported businesses through that very difficult period by suspending normal debt management activities and implementing the Debt Warehousing Scheme, which provided a vital liquidity support to businesses. Under the scheme, businesses can temporarily ‘park’ certain tax debts on an interest free basis until the end of this year (or until 30 April 2023 for businesses who qualified for the warehoused extension). However, to remain eligible for the Debt Warehousing Scheme, in addition to filing all returns for the warehouse periods, current liabilities must also be filed and paid on time.

The Government understands the very significant challenges that businesses are currently experiencing in meeting their tax obligations, arising from the impacts of the current energy costs crisis and the financial pressures this have placed on businesses as they continue their recovery from the pandemic. I welcome the important changes Revenue has recently announced to the Debt Warehousing Scheme, which will ease the burden on many taxpayers in light of the current challenging economic situation. Under the scheme, businesses with warehoused debt were due to enter into an arrangement to deal with that debt by the end of the year (or by 1 May 2023 for those subject to the extended deadline). Given the current economic uncertainty, Revenue has extended the timeline to 1 May 2024. This means that businesses will not now be faced with the challenge of either clearing the debt in the warehouse or entering into a phased payment arrangement to clear that debt until 1 May 2024. Importantly also, businesses will still be able to avail of the reduced 3% interest rate from 1 January 2023, as opposed to the general interest rate of 10%, when they come to pay the debt. I expect this will be of great benefit to a large number of businesses and will significantly ease their cashflow burden.

Earlier this year, Revenue commenced a phased return to standard debt collection for non-warehoused debt, which had been partially suspended since the start of the pandemic in March 2020. As part of Revenue’s standard debt collection procedure, where current taxes become overdue, a request for payment will issue with details of the tax(es) due, requesting payment within a set time frame. The request for payment outlines the consequences of continued non-payment and affords the taxpayer up to 10 days to engage. In the absence of customer engagement, a final demand issues allowing another 7 days for the customer to engage. Where there is continued lack of engagement from the customer in response to these notices, the case is escalated for further action.

The majority of taxpayers take action to resolve their payment difficulty without recourse to enforcement action. Revenue encourages taxpayers to engage early when payment difficulties arise, particularly during the current energy costs crisis. Revenue has a strong track record of successfully working with individuals and businesses to resolve their payment difficulties. In most cases, a mutually satisfactory solution is found without resorting to enforcement action. For example, taxpayers can enter into a Phased Payment Arrangement to pay off their debt in instalments over a period of time. Furthermore, Revenue has introduced a number of flexibilities into its payment arrangements to assist businesses, including reduced down payments, longer repayment periods and the option to take a payment break.

The important message for taxpayers is to engage with Revenue at the earliest opportunity so that a mutually acceptable solution can be found to enable them work through their difficulties. I am assured that Revenue appreciates the challenge for businesses in paying their outstanding liabilities in a difficult economic and financial climate and Revenue is committed to finding solutions which are flexible, and which take account of the financial circumstances of the business concerned.