The Debt Warehousing Scheme was one of the measures introduced to assist businesses experiencing cashflow and trading difficulties arising from the impacts of COVID-19. The scheme allowed for the warehousing of tax liabilities in respect of VAT from January 2020 to December 2021, Employer PAYE from February 2020 to December 2021, Income Tax for 2019 and 2020 (dependent on total income for 2020 and then 2021, being at least 25% less than total income for 2019),TWSS and EWSS, subject to fulfilling certain criteria.
A key qualifying condition of the scheme was that all tax returns were filed on time, even if no liability arose. Revenue have recently written to all taxpayers with outstanding returns reminding them of this requirement and including the following final warning:
If you have not filed all outstanding returns by 30th April 2022, you will lose the benefits of this scheme. This means that the total tax debt will be payable immediately and interest rates will apply from the start of May.
The scheme allows for the warehousing of certain tax debts within the Scheme Periods as follows:
Period 1 – The first period ends on 31 December 2021. Relevant tax debts incurred from the commencement of Covid up to this date can be warehoused. There will be 0% interest applied to Period 1.
Period 2 – From 1 January 2022 to 31 December 2022. Interest rate applied is also 0%. Taxpayers should contact Revenue with their repayment plan for warehoused debt before 31 December 2022.
Period 3 – Phase of indefinite duration commencing 1 January 2023, 3% interest will be applied to all warehoused debt from start of Period 3 up to date the debt finally is discharged – as opposed to the 8% and 10% payable under normal PPA arrangements.
Tax Clearance will not be affected by businesses availing of the warehoused arrangements, provided they keep all tax returns up to date.
Tax clearance will therefore be impacted if you do not meet these requirements, and you will then be excluded from the scheme. In these circumstances the warehoused debt falls due immediately and either must be paid in full, or an PPA arrangement entered into – these can require significant inputs, take time to get into place and will be at the higher interest rates.
Note that an extension to Debt Warehousing has been given to businesses who were impacted by further restrictions in December 2021 and have received Government supports such as CRSS or EWSS during period 01 Jan 2022 to 20 April 2022. They have been given an extension for the relevant taxes up to the end of April 2022 i.e. the Mar/Apr 2022 VAT return and April PAYE submission can be included in Debt Warehousing. The interest free basis is extended to 30 April 2023 (for Period 2) in these instances.
For further details please see link below:
Should you have any queries on the Debt Warehousing Scheme, please do not hesitate to contact us on 074 93 21420 or firstname.lastname@example.org.