Michael McGrath (Cork South Central, Fianna Fail)
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The Tax Debt Warehousing Scheme has provided vital and practical liquidity support to businesses during the COVID pandemic and subsequent cost of living challenges by assisting businesses with their cash-flow during difficult trading periods, thereby preventing business failure.

The scheme allowed businesses to temporarily defer VAT and Employer PAYE, certain self-assessed income tax liabilities, and Temporary Wage Subsidy Scheme and Employment Wage Subsidy Scheme overpayments on an interest-free basis for an extended period of time after which a reduced interest rate of 3% was to be applied.

However, on Monday 5th February, I announced that the interest rate applying to warehoused tax debt will be further reduced to 0% until such time as the debt has been paid or all customers have exited the scheme.

This change has been made in light of the unique nature of the warehoused debt, and in order to further support otherwise viable businesses which were impacted by public health restrictions during the pandemic. While the necessary legislation will be introduced at the next available opportunity, in the interim Revenue has confirmed that it will operate the reduced rate on an administrative basis and refund any taxpayers who have already paid interest at the 3% rate in respect of warehoused debt.

The total debt in the warehouse has decreased substantially since January 2022 when over €3 billion was warehoused for over 100,000 customers. By 26 January 2024, a total of €1.72 billion was warehoused for 57,435 customers, of which 70 per cent have outstanding liabilities of less than €5,000. The bulk of the debt (€1.47 billion) was warehoused by 5,265 customers with outstanding balances greater than €50,000.

Businesses availing of the scheme are required to engage with Revenue by 1 May 2024 to make arrangements to pay the debt over an agreed period of time, based on their individual circumstances.

Revenue has advised me that their approach will be flexible in relation to payment plans on warehoused debt, having regard to the financial circumstances of each case and the customer's capacity to pay. These flexibilities include the possibility to extend the duration of payment arrangements beyond the typical three to five-year duration. In addition, Revenue has confirmed that an initial down payment may not always be required upon commencing a payment arrangement.

Revenue has also advised that a number of additional flexibilities are available to address any payment difficulties that may arise during the term of the payment arrangement, such as options to take a payment break, deferral of next payment due, amendment to payment date and amendment to monthly payment amounts.

With that said, it remains a key condition of the scheme that businesses continue to file their current tax returns and pay current liabilities as they fall due. By doing so, businesses will benefit from the 0% interest rate and flexible payment options available in respect of warehoused debt. The consequence of not meeting these conditions is that the warehouse facility is revoked, which will result in the standard interest rate of 10% applying and the immediate enforcement of all outstanding debt, including interest.

Where businesses are experiencing cashflow difficulties impacting their ability to meet ongoing tax obligations on a timely basis, the advice remains to engage with Revenue as soon as such difficulties start to arise, so that an agreed solution can be found. Where there is meaningful and proactive engagement, Revenue will work with businesses and give them every possible support in managing the payment of the debt over a timeline that suits the individual circumstances of the business.