Irish Tax Institute calls on Revenue to support repayment of warehoused debt

'It’s essential that we can get proper, realistic phased payment arrangements in place,' said Colm Browne, president of the Irish Tax Institute

President of the Irish Tax Institute Colm Browne called on Revenue to continue to support businesses in the run-up to January 1, 2023, the date when firms will begin to make repayments. Picture: Laura Hutton/RollingNews.ie.

President of the Irish Tax Institute Colm Browne has said that Revenue must take a "pragmatic approach" towards companies repaying warehoused tax debt as many small firms struggle to make ends meet as costs soar.

He called on Revenue to continue to support businesses in the run-up to January 1, 2023, the date when firms will begin to make repayments.

"It’s essential that we can get proper, realistic phased payment arrangements in place," said Mr Browne. He said many small businesses were struggling with soaring input costs and staff shortages. 

Mr Browne said Revenue must show understanding and support in regard to the repayment of the warehoused debt scheme. He added while some businesses with warehoused tax debt will fail, those companies that are viable and compliant deserve "a fighting chance".

The Debt Warehousing Scheme allows businesses to temporarily ‘park’ certain Covid-19-related tax debts on an interest-free basis until the end of 2022 or until April 30, 2023, for businesses impacted by the public health restrictions introduced in December 2021.

Debt repayments

Concerns are mounting that some companies will be unable to pay back these debts on time due to rising costs and a fall in consumer demand as customers cut back on discretionary spending.

According to Revenue, the total debt eligible for the Debt Warehousing Scheme since its introduction is €31bn, and 250,000 businesses were eligible to avail of the scheme. 

Figures provided by Revenue showed 91% of that debt has been paid, with the balance of €2.8bn warehoused for just over 84,000 businesses at the end of July 2022.

Some firms that have the capacity to make repayments have paid off some or all of the debt that is in the warehouse on an ongoing basis. This is reflected in the drop to 84,000 businesses availing of the scheme at the end of July down from almost 105,000 businesses at the end of January.

In a statement to the Irish Examiner, Revenue said it expected these repayments to be a feature in the remaining months of 2022.

Revenue said it would communicate with businesses from October 2022 onwards inviting them to either pay the debt in full if they have the capacity to do so by the end of the year, or end April 2023 as applicable. 

If these repayments are not made, businesses will establish phased payment arrangements (PPAs) with Revenue. These PPAs "will have regard to the financial circumstances of the business" and will start the process of clearing debts from 2023 at a reduced interest rate of 3%.