Government to examine business supports following wave of restaurant closures

Cork restaurant Nash 19 announced it was closing last week. Picture: Larry Cummins

The Government is set to examine the debt warehousing scheme in a bid to help businesses still struggling post-covid.

Tánaiste Micheál Martin confirmed Finance Minister Michael McGrath was ready to examine the phased payments element of the scheme in the wake of a spate of restaurants and cafe closures — four in Cork City in the last 10 days alone — all citing soaring business costs.

An estimated €1.7bn is owed in covid-era warehoused tax debt.

But Mr Martin effectively ruled out a Vat reduction for food-led business.

The reduced 9% rate for tourism and hospitality was reintroduced in Budget 2021 at an estimated cost of €401m. It was extended in Budget 2022 to August 2022 at a further estimated cost of €251m, and extended again to March of this year.

He accepted the hospitality sector was facing ongoing challenges post covid, but he defended Government supports for the sector and rejected claims from the Restaurants Association of Ireland (RAI) that the Government is not listening to the concerns of what it says is “a sector in crisis”.

“We’ve always been listening and I think that's an unfair assertion by the Restaurants Association of Ireland because they know well during covid-19 we stepped up to the plate and we provided very substantial resources to the hospitality sector,” Mr Martin said.

“They are going through a lot of pressure. I think what we're witnessing is a more long-term effect of covid. Covid impacted on a whole range of the economy and society —it's not gone away."

Stephen Vaughan, owner of the White Rabbit on MacCurtain Street: the restaurant will close on February 4 after nine years in business. Picture: Denis Minihane

But he said the Government could examine the debt warehousing scheme.

“That is something I think we can look at and I’ll talk to the minister for finance Michael McGrath in respect of that to see if that can be structured in a way. It had already been restructured to some degree in terms of phasing. But our objective is to keep businesses open,” he said.

In October 2022, Revenue announced a 12-month extension to the debt warehousing scheme which allowed businesses with warehoused debt to enter into an arrangement with Revenue to deal with that debt by the end of that year — or by May 1, 2023, for those subject to an extended deadline.

Then, against the backdrop of economic uncertainty, Revenue extended that deadline to May 1, 2024.

But the RAI said the sector needed a rescue package that included a 10-year repayment period for that debt, and a reduced Vat rate of 9%.

Mr Martin said the Government provided a €250m business supports package in the budget, and he said when government reduced the Vat rate to 9% during covid, some hotels did not respond as Government had hoped.

“The prices went up, as we witnessed across many towns and cities in the country if the truth be told,” he said.