Businesses need 'realistic plans' to pay warehoused tax debt

€1.76bn owed by May 1

Revenue collected a record amount of tax in 2023 totalling €87.2bn. Photo: Laura Hutton/RollingNews.ie

Revenue has advised businesses to make “realistic plans” to pay back debt owed under the tax warehousing scheme as over €1.76bn is set to come due on May 1.

The Debt Warehousing Scheme allowed businesses to temporarily ‘park’ certain covid-related tax debts on an interest free basis. Businesses either need to enter a phased payment arrangement for the tax owed or pay it back in full by the start of May.

According to the Revenue Commissioners results for 2023, there is currently €1.756bn in debt under the scheme, €158m of which is covered by payment plans. Of all the businesses in the scheme, 69% have an outstanding balance of less than €5,000.

Revenue Commissioner Ruth Kennedy said businesses in the scheme “should start making realistic plans for dealing with this debt based on their individual circumstances”.

The warehousing scheme makes up the largest proportion of the €3.58bn in taxes owed to Revenue. Outside of the scheme, there is €1.4bn still in unpaid taxes available for Revenue to collect, along with €348m currently under appeal and €63m subject to ongoing insolvency proceedings.

During 2023, Revenue completed 291,000 audit and compliance interventions yielding €787m. There were over 46,500 debt enforcement actions which yielded €202m for the Exchequer with more than 11,000 phased payment arrangements made with customers for the repayment of €406m.

In the area of tax-avoidance schemes, Revenue said it secured 21 criminal convictions for serious tax evasion and fraud in 2023. It also published 63 tax settlements in the list of tax defaulters as well as settled 85 tax avoidance cases yielding €16.5m.

Ms Kennedy encouraged people who are experiencing challenges to engage with them as “soon as the difficulties start to emerge” so that a “mutually agreeable solution that takes account of their financial circumstances can be agreed”.

“In the absence of meaningful and timely engagement with Revenue, Revenue will proceed with appropriate collection and enforcement action to recover the debt,” she said.

In terms of taxes collected, 2023 was a record year for Revenue with €87.2bn taken in from taxes and duties for the Exchequer. Income tax accounted for nearly €33bn, while corporation tax accounted for €23.8bn. Collections for Vat came to €20.3bn while excise duties came to €5.6bn.

Revenue is also tasked with targeting and disrupting parts of the shadow economy and other illegal activities such as smuggling. In 2023, the agency seized almost 70 million cigarettes, valued over €55m, as well as over 9,000kg of drugs with an estimated value of over €300m.

The running cost of Revenue was €585m during 2023 which employs nearly 7,000 staff.