03 Oct 2022

Covid hit businesses and self-assessed taxpayers can 'warehouse' tax debt

Revenue explains how people can benefit

Covid-19 Covid-19 Covid-19

Revenue Commissioners remind people about the facility available

Ireland's tax office has this week written to over 100,000 taxpayers confirming that their tax debts totaling €2.2 billion are eligible for Debt Warehousing.

Revenue says the Debt Warehousing Scheme allows VAT and PAYE (Employer) debts incurred by businesses during the period of restricted trading caused by Covid-19 to be ‘parked’ on an interest free basis for 12 months following the resumption of trading. 

The tax office says that at the end of the 12-month interest-free period, the warehoused debt may be paid in full without incurring an interest charge or paid through a phased payment arrangement at a significantly reduced interest rate of 3% per annum. Revenue said this compares to the standard rate of 10% per annum that would otherwise apply to such debts.

The letters which issued this week explain, according to Revenue, the benefits of warehousing and confirm for each individual business the exact amount of debt that has been warehoused. In some cases where returns are outstanding, the businesses are requested to file these returns within 28 days in order to continue availing of the benefits of debt warehousing.

Revenue reminded any other businesses who have not received a letter and who wish to avail of the Debt Warehousing Scheme to contact the Collector-General’s office to apply for the scheme. There are certain straightforward steps to be completed to ensure that debts are properly warehoused.

Collector-General, Joe Howley outlines the key steps that businesses need to take.

He said: “To avail of the Debt Warehousing Scheme, businesses need to file all relevant tax returns for the restricted trading period(s) so that the exact liability can be quantified and included in the scheme. Businesses that may have made a best estimate return of liability while Covid-19 restrictions were in place need to file the return so that the full liability can be quantified and warehoused.

"Businesses that have additional tax liabilities that have not yet been declared to Revenue in the appropriate tax return, due to error or omission, must self-correct or make an unprompted disclosure. Completing these steps will ensure businesses can avail of this significant support during an extremely challenging time."

A statement said Budget 2021 provides for the extension of the Debt Warehousing Scheme to the recovery of any overpayments arising from the Temporary Wage Subsidy Scheme. The Budget also extended the warehousing facility to self-assessed 2019 income tax and 2020 preliminary tax liabilities.

Mr Howley explained said the pay and file deadline of December 10 is fast approaching.

“The extension of the scheme announced as part of last month’s Budget gives self-assessed taxpayers the option to warehouse the balance of their 2019 income tax and 2020 preliminary tax liabilities," he said.

"When filing their 2019 Form 11 income tax return, self-employed taxpayers can make a declaration that their total income for 2020 is expected to be at least 25% less than their total income for 2019 due to Covid-19. Once 2019 preliminary tax obligations were fully met, Revenue will warehouse these tax debts under the expanded scheme."

Self-assessed taxpayers who have already filed their return and now wish to avail of the Debt Warehousing Scheme can contact the Collector-General’s office through MyEnquiries or by telephone at 01-7383663 (9.30am to 1.30pm) to arrange to have their liabilities warehoused.

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