Richard Bruton (Dublin Bay North, Fine Gael)
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81. To ask the Minister for Finance if he has undertaken an assessment of the impact the phasing out of tax warehousing will have on the rate of business failure; and if he is satisfied existing policy options are appropriate to manage this situation. [2756/23]

Michael McGrath (Cork South Central, Fianna Fail)
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During the COVID-19 pandemic, Revenue strongly supported businesses by suspending normal debt collection activities and implementing the Debt Warehouse Scheme to provide businesses with vital liquidity support. In October 2022, Revenue announced an important and significant extension to the Debt Warehousing scheme in light of the challenging economic situation that businesses continue to face.

Under the scheme, most businesses with warehoused debt were due to enter into an arrangement with Revenue to commence repaying that debt by the end of 2022. This timeline has been extended to 1 May 2024. This significant additional time to make repayment arrangements should greatly support businesses and prevent business failure. Importantly, businesses may still avail of the reduced 3 per cent interest rate from 1 January 2023, as opposed to the general interest rate of 10 per cent, when they come to pay the debt.

As end-2022, over 68,000 individual customers are availing of the Debt Warehousing facility with €2.371 billion currently warehoused. A total of 7,018 customers with warehoused debt in excess of €50,000 account for €2.018 billion of the overall warehoused debt figure. It is worth noting also that a total of 1,921 customers with €68 million warehoused debt have voluntarily entered into phased payment arrangements.

It is a condition of the Debt Warehousing Scheme that current liabilities are filed and paid on time. Revenue have advised me that it is closely monitoring cases and is concerned that some businesses are not keeping current returns and payments up to date. If non-compliance persists this will result in the debt warehouse status being revoked.

Revenue have advised me that its expectation is that the extended timeline for the Debt Warehousing scheme to 1 May 2024, together with flexible payment arrangements, will assist most businesses to work through any difficulties and will satisfactorily address the repayment of their tax debt over an acceptable period of time. Revenue has a proven track record in agreeing flexible Phased Payment Arrangements to allow for the repayment of debt over a period of time.

Finally, recent reports indicate that Government supports, including the debt warehousing scheme, have so far prevented the level of business failures that would otherwise have been expected from trading restrictions during the pandemic. For instance, the ESRI estimated that the level of financial hardship would have been 72 per cent higher without the €10 billion in wage subsidies paid by the Government during the pandemic.