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Press release

Minister McGrath welcomes successful conclusion of Tax Debt Warehousing scheme

  • 93% of €3.2 billion peak warehouse debt is now paid, secured under phased payment arrangement or under final negotiations / approval
  • €284 million in warehoused debt paid since beginning of 2024
  • outstanding balance in warehouse reduced to €100 million, now subject to standard collection procedures

The Minister for Finance Michael McGrath has today (5 June 2024) welcomed the publication by Revenue of statistics on the Tax Debt Warehousing scheme. The publication includes a full analysis of the 12,747 Phased Payment Agreements (PPAs) agreed in respect of warehouse debt as well as a breakdown of the over €100 million outstanding debt.

The scheme, which has now ended, 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.

At its peak in January 2022, almost 105,000 customers had warehoused circa €3.2 billion debt, the vast majority of which related to VAT and payroll taxes. However, today’s publication shows that, as at 3 June 2024, over 93 per cent of the peak debt has either been paid in full, secured under PPAs, is subject to ongoing negotiations or awaiting approval to offset against tax refunds or credits. Over 95 per cent of agreed PPAs are expected to be completed within the next 5 years.

Relevant businesses had until 1 May 2024 to engage meaningfully with Revenue in respect of their individual circumstances and discuss arrangements to pay their warehoused tax liabilities. A demand notice issued on 8 May to the 11,724 customers who had not engaged with Revenue by that date, offering one final opportunity to address their warehoused debt and continue to avail of the 0 per cent interest rate on that debt. A total of 7,042 warehouse customers did not engage with Revenue following this notice and so their debt is now subject to standard collection and enforcement at the standard interest rates.

Commenting on the scheme, Minister McGrath stated:

“I wish to acknowledge the work of the Collector General’s Division in Revenue and the success of the Tax Debt Warehousing scheme in supporting viable businesses and employments during an unprecedented and exceptionally difficult trading environment. Thanks to their efforts, the scheme successfully offered valuable and practical liquidity support to businesses by assisting with their cash-flow, thereby preventing business failure.

"I also wish to acknowledge the significant levels of engagement to date by taxpayers and their agents in agreeing realistic payment plans tailored to their particular circumstances. As a result of their engagement, the amount of warehoused tax debt has reduced by a substantial €284 million since January of this year.

"For those customers who have agreed PPAs, it is important to note that in order to retain the 0 per cent interest rate, it remains a key condition that current taxes are filed and paid as they fall due, and that all monthly payments are honoured as agreed.

"It is important to highlight that any taxpayer experiencing temporary cashflow difficulties which impact on their ability to meet their tax obligations on a timely basis should engage with Revenue at the earliest opportunity. Revenue will work with viable businesses in a fair and pragmatic way to agree mutually acceptable payment solutions. On a case-by-case basis this may include options such as a payment deferral or a payment break, rather than deploying debt collection and enforcement options.”

Notes

Introduced in 2020, the Tax Debt Warehousing scheme allowed businesses to temporarily defer VAT and Employer PAYE, certain self-assessed income tax liabilities, and Wage Subsidy Scheme and Employment Wage Subsidy Scheme overpayments on an interest-free basis for an extended period of time, up to 31 December 2022, or until 30 April 2023 for those who received certain COVID supports. After this, a 3 per cent interest rate was applicable until the debt is either repaid or the customer otherwise exits the warehouse.

However, on 5 February 2024, the Minister for Finance announced that the applicable interest rate for debt in the warehouse has been reduced to 0 per cent. Revenue are operating the reduced rate on an administrative basis pending the necessary legislative change, which will be introduced at the next available opportunity.

At the peak of the scheme in January 2022, there was €3.2 billion in the warehouse (in respect of almost 105,000 individual entities). As at 3 June 2024, the outstanding balance in the warehouse had reduced to €100.56 million, with the significant majority of this reduction due to payments by customers. This balance is owed by 7,042 customers, with 58.7 per cent of those customers having outstanding liabilities of less than €100,000. The remainder of the debt (€41.51 million) is in respect of 164 customers with outstanding balances greater than €100,000.

Although the scheme has now ended, customers who have yet to engage with Revenue in respect of their warehoused debt should still do so at the earliest opportunity to agree arrangements to address their liabilities. For those who haven’t engaged on foot of the demand notice, Revenue has started its collection process and will apply the standard interest rates of 8 per cent and 10 per cent on any outstanding warehoused debt.