More than €1.66bn in firms’ covid tax debt still due before May 1

With one month left before payment is due, firms are advised to engage with Revenue

The figures from Revenue has led groups such as Isme to 'strongly advise' members to engage with the tax body.

More €1.66bn in warehoused tax debt deferred by firms from the pandemic remains outstanding a month before payment is due, with plans yet to be agreed on the vast majority of it.

The figures from the Revenue Commissioners has led groups such as the Irish SME Association (Isme) to “strongly advise” members to engage with the tax body, with the cost of not engaging potentially costing an additional penalty of between 8% and 10% of the total owed.

The Debt Warehousing Scheme was brought in during the pandemic to support businesses through lockdown measures. It allowed companies to defer the payment of Vat, employer PAYE and certain other tax liabilities including employment wage subsidy scheme (EWSS) overpayments.

According to the figures, €1.66bn in debt is owed by 56,223 businesses, with 70% of those businesses having outstanding liabilities of less than €5,000. The bulk of this debt, €1.42bn, is from 5,083 businesses with outstanding balances of greater than €50,000.

So far, a total of 2,563 businesses have agreed payment plans with Revenue which covers €208m in debt in addition to other businesses continuing to partially or fully pay their liabilities on an ongoing basis.

At its peak in January 2022, the scheme held €3.2bn in warehoused debt.

The most recent figures available from Revenue come from March 21. As at the end of February, €109m had been written off in respect of 1,313 businesses, as a result of those businesses becoming insolvent.

The deadline for paying off the debt is May 1.

Chief executive of Isme, Neil McDonnell, said that while some businesses may be able to trade their way out of this debt, others “will require some sort of restructure”.

“At a certain point, nobody can continue to kick this can down the road. In short, this restructuring process will mean that some businesses will cease to trade. We have to recognise that,” he said.

Mr McDonnell added that Revenue may have to recognise that some of this debt will never be repaid as even viable businesses may have difficulty.

Towards the end of March, Revenue wrote to customers in the scheme with a schedule of their warehoused debt and highlighting the action required before May 1, 2024 to address the debt, and the payment options available.

Revenue said it was important to note that there is no expectation that businesses have the total amount owed paid off by May 1 but they must engage with the agency to put a plan in place to address it.

“Businesses should therefore act now, and not wait until 1 May 2024, to engage with us,” Revenue said.

It added that it is essential that businesses submit their payment plans to revenue in advance of May 1 to allow time for them to “mutually agree the optimal payment plan to suit the business’s individual circumstances”.

“Alternatively, in advance of 1 May, where a business has the financial capacity to do so, they can pay their warehoused debt through one of Revenue’s online payment channels.” 

Revenue is advising businesses struggling to pay the debt to engage with them as soon as possible so a solution can be found.