Colm Burke (Cork North Central, Fine Gael)
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146. To ask the Minister for Finance the supports available to any of the 65,000 firms around the country faced with tax-debt warehousing repayments dating back to the earlier stage of the Covid-19 pandemic in 2020, that may struggle to pay back this debt with the climate of increased costs at this time; and if he will make a statement on the matter. [20943/23]

Michael McGrath (Cork South Central, Fianna Fail)
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The Debt Warehousing scheme allows for the deferral of the payment of VAT, PAYE (Employer) and certain self-assessed income tax liabilities, including TWSS and EWSS overpayments. It provided a vital liquidity support to businesses during the Covid pandemic and continues to support businesses as they recover from the impacts of the pandemic and the current energy crisis.

At the end of March 2023, the value of debt warehoused was €2.216 billion for 63,600 businesses. Of this total, 19,758 (31%) have warehoused debts of less than €100, 9,767 (15%) have warehoused debts between €101 and €1,000 and a further 11,769 (19%) have warehoused debts between €1,001 and €5,000. In total 65% of businesses in the warehouse have an outstanding balance of less than €5,000.

The bulk of the debt figure is warehoused by just 6,617 customers, with outstanding balances greater than €50,000, totalling €1.928 billion.

In October 2022, Revenue announced an extension to the period during which debts can remain “parked” in the warehouse. This means that businesses no longer have the challenge of making arrangements to repay their warehoused debt until 1 May 2024 and this significant additional time should greatly support businesses and prevent business failure. Importantly also, businesses are still 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. To reduce their interest bill, some businesses have already begun to repay their warehoused debt where their financial circumstances permit and, to date, just over 2,000 customers have agreed payment arrangements with Revenue for warehoused debt of €73 million.

However, it remains a key condition of the Debt Warehousing Scheme that current liabilities are filed and paid on time. Revenue is actively engaging with businesses in the scheme to ensure they are complying with this key condition in order to retain the benefits of the scheme. Where payment difficulties arise, particularly in relation to current tax obligations, I am assured that Revenue will work proactively with businesses who engage early to resolve these payment difficulties.

Revenue has a proven track record in agreeing flexible Phased Payment Arrangements that take account of the financial circumstances of each business and their capacity to pay. These flexibilities can include a reduced down payment amount to commence the payment arrangement, an extended payment duration of up to 5 years and the availability of payment breaks and payment deferral when temporary cash flow difficulties arise during the arrangement term.

In addition, early and proactive engagement to address payment difficulties will assist taxpayers to retain tax clearance and to remain eligible for other Government financial supports such as the Temporary Business Energy Support Scheme (TBESS). This scheme provides supports to qualifying business in respect of increases in their electricity and natural gas costs, subject to certain criteria.

In summary, Revenue’s expectation is that the extended timeline to 1 May 2024 for entering into arrangements for repaying warehoused debt, together with flexible payment arrangements and other direct financial supports such as the TBESS, will assist most businesses to work through any difficulties and will satisfactorily address the repayment of their tax debt, including any warehoused debt, over an acceptable period of time.