06/09/2021

06/09/2021

Tax Debt Warehousing Update

Background

On 4 June 2021, the Revenue issued updated guidance on the warehousing of tax debts, which both simplified and clarified the position. The Revenue Information Booklet is available at - https://www.revenue.ie/en/corporate/communications/documents/debt-warehousing-reduced-interest-measures.pdf 

Tax Debt that can be warehoused

VAT, Employers PAYE, Income Tax and TWSS/EWSS in relation to taxpayers dealt with by the Revenues Business Division (turnover < €3million) and Personal Division. Access is available subject to application for businesses managed by Revenue’s Large Corporates Division (LCD) and Medium Enterprise Division (MED).

Phases in the scheme

Period 1, the Covid-19 restricted trading period (see below)  Period 2, the “Zero interest period” from 1 January 2022 to 31 December 2022 Period 3, the “3% Reduced Interest Period” (See below) commences 1 January 2023  

Phase 1

This commences for periods ending February 2020 and ends on 31 December 2021. No interest is levied by Revenue during this period.  

Phase 3

Taxpayers should contact Revenue with their repayment plan for the warehoused debt before 31 December 2022. We can provide guidance and engage with Revenue on your behalf.  The length of the plan will depend on the circumstances of each case.  3% interest will apply to this debt from 1 January 2023 to the end of the instalment arrangement agreed with Revenue.  

Taxpayers Obligations

All tax returns must be filed on time and payment of tax liabilities (not covered by warehousing) must be made as they fall due.  

Tax Clearance

Warehousing will not impact on tax clearances or the ability of a licensed trader to renew their licence.  

Phased Payment Arrangements

If you have an existing phased payment arrangement in place prior to warehousing, it is not affected by this scheme and the arrangement remains subject to the conditions agreed with Revenue.  

Landlords

If a landlord’s tenant/s is/are unable to pay all or part of the rent due, as a result of Covid-19 restrictions, and, as a consequence, the landlord estimates their total income for 2020 or 2021 will be less than 75% of their total income for 2019, the landlord can avail of debt warehousing for Income Tax.

HOW CAN WE HELP?

We are here to support you and your business in these unprecedented times. We would encourage you to reach out to us if you would like to discuss any of the matters referred to above. Equally feel free to call if you would like to discuss matters generally.  Please accept this communication as our interpretation of the subject matter. Always take tax advice specific to your fact pattern. You are encouraged to contact us if you are unclear or would like to discuss the content.