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Press release

Minister McGrath announces significant changes to €1.7 billion Tax Debt Warehousing scheme

  • interest rate on warehoused debt reduced to 0%; interest paid on warehoused debt will be refunded
  • the Minister welcomes the Revenue statement confirming additional flexibilities relating to the payment of warehoused debt. Additional flexibilities may include payment breaks and changes to monthly payments for businesses experiencing cash flow difficulties

The Minister for Finance Michael McGrath has today (5 February 2024) announced significant changes to the Tax Debt Warehousing scheme of a reduction in the interest rate applying to warehoused tax debt to 0%.

In addition, Revenue has confirmed that, where a business has already paid warehoused debt, which was subject to interest at 3%, it will get a refund of that interest. This will ensure that all taxpayers are treated fairly.

Minister McGrath has also noted today’s statement by Revenue confirming the flexible approach it is taking in working with customers in relation to warehoused debt. This will include the possibility to extend the duration of payment arrangements beyond the typical three to five-year duration on a case-by-case basis, and that an initial down payment may not always be required.

Commenting on the change to the scheme, Minister McGrath stated:

“This government is acutely aware of the ongoing cost pressures faced by businesses and is determined that viable businesses are given every chance to succeed in a challenging trading environment.

"Acknowledging this, I have today announced that the interest rate applicable to outstanding warehouse liabilities will be reduced from 3% to 0%. I will be bringing forward the necessary legislation to give effect to this and Revenue has confirmed that it will implement the 0% on an administrative basis in the meantime. Where a business has already paid warehoused debt, which was subject to interest at 3%, it will get a refund of that interest. This will ensure that all taxpayers are treated fairly.

"My department has engaged extensively with Revenue on this matter and I welcome their statement in relation to flexibility on Phased Payment Arrangements in respect of warehoused debt including offering extended durations for payment and accepting much reduced, or minimal, levels of down payment.

"Although the total debt warehoused has decreased by €1.4 billion since January 2022, €1.72 billion remains outstanding. I also note that the number of businesses in the warehouse has reduced from approximately 105,000 at its peak to just under 57,500 and this demonstrates that businesses are doing their best to pay the amounts due but some businesses need additional space and time to address their liabilities.

"Warehoused debt arose during the periods when businesses were significantly impacted by public health restrictive measures imposed during the COVID-19 pandemic. These changes to the scheme have been agreed in recognition of the unique nature of the warehoused debt and in light of the government intention to support otherwise viable businesses to continue to trade while having the opportunity to reduce their warehoused liabilities in a structured and manageable way.

"The key message is that businesses should engage with Revenue: Businesses availing of the Tax Debt Warehousing scheme need to engage with Revenue prior to 1 May 2024. To avail of the flexible approach to tax debt warehousing we are outlining today, they must also file their current tax returns on time and meet their current tax liabilities as they fall due.

"As the Revenue statement said, Revenue will be pragmatic and flexible in relation to the payment plans on warehoused debt and will work with businesses in the scheme so that they can secure the viability of their business into the future.”

Notes

The Tax Debt Warehousing 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 3% interest rate applied.

All businesses availing of the Tax Debt Warehousing scheme have until 1 May 2024 to either:

  • pay their warehoused debt in full; or
  • engage meaningfully with Revenue in respect of agreeing a personalised Phased Payment Arrangement (PPA)

The Tax Debt Warehousing scheme has provided vital support to businesses during the pandemic and subsequent cost-of-living difficulties by assisting businesses with cash-flow during difficult trading periods, preventing business failure.

Although the total debt warehoused has decreased by €1.4 billion since January 2022, Revenue has confirmed that, as of 26 January 2024, debt amounting to €1.72 billion was warehoused for 57,435 customers, of which almost 70% was for amounts less than €5,000. The bulk of the debt (€1.47 billion) was warehoused by 5,265 customers, who have outstanding balances greater than €50,000.

The necessary legislation to implement the 0% interest will be introduced at the next available opportunity; and Revenue has confirmed it will operate the reduced rate on an administrative basis pending the legislative change.

Businesses are encouraged to engage with Revenue at the earliest opportunity to discuss their individual circumstances and agree arrangements to address their liabilities.