On 2 May 2020, the Government announced it would legislate to provide that Revenue would warehouse deferred VAT and payroll taxes debts associated with the Covid-19 crisis.
The tax debt warehousing arrangement allowed a business to park unpaid VAT and PAYE (Employer) tax debts, that arose from the COVID-19 crisis for a period of 12 months after a business resumed trading. No interest was to accrue during this period with an interest rate of 3% per annum to apply on the repayment of these ‘warehoused tax debts’ after that date.
Legislation underpinning the tax measures announced in the July Jobs Stimulus, the Financial Provisions (Covid-19) (No. 2) Act 2020, was signed into law by the President on 1 August 2020. It provided for an extension of the reduced 3% per annum interest rate on warehoused VAT and payroll tax liabilities to other tax debts agreed before 30 September 2020. In a press release on 30 September 2020, Revenue confirmed the deadline to avail of reduced rate of interest on outstanding non-COVID-19 tax debts would be extended to 31 October 2020.
Finance Act 2020 extended the Debt Warehousing Scheme to include certain income tax liabilities for 2020 and 2021 for the self-employed and to include overpayments of Temporary Wage Subsidy Scheme (TWSS) payments by Revenue to employers.
In January 2021, Revenue confirmed that the Scheme remained available to support businesses experiencing tax payment difficulties arising from the COVID-19 Level 5 public health restrictions
On 1 June 2021, the Government launched the Economic Recovery Plan 2021 and as part of the measures announced, the period of time during which tax debts could be warehoused was extended until the end of December 2021 and it was extended to cover overpayments of the Employment Wage Subsidy Scheme (EWSS). The Finance (Covid-19 and Miscellaneous Provisions) Act 2021, which includes the amendments to the Scheme announced in the Economic Recovery Plan 2021, was signed by the President on 19 July 2021.
The Act inserted a new section 28D into the Emergency Measures in the Public Interest (Covid-19) Act 2020 to provide for warehousing of EWSS overpayments, refunds of TWSS payments, PAYE, income tax, VAT and PRSI, as follows:
On 21 December 2021, the Scheme was extended to assist businesses impacted by the newly announced public health restrictions. Period 1 (the Covid-19 restricted trading phase) was extended to 31 March 2022, where certain criteria are satisfied. On 21 January 2022, the Government extended this period by one month to 30 April 2022. Period 2 (the zero-interest phase) for these taxpayers will now run from 1 May 2022 until 30 April 2023. Period 3 (the reduced interest phase) will run from 1 May 2023.
The extension to the Debt Warehousing Scheme will not apply to businesses that are not currently in receipt of one of the relevant COVID-19 Support Schemes.
At the end of September 2022, Revenue began writing to all taxpayers participating in the Debt Warehousing Scheme (or who were eligible to participate) to offer them the opportunity to “self-review” their returns for taxes eligible for warehousing in Period 1 and make an Unprompted Qualifying Disclosure in relation to any additional liabilities identified by 31 January 2023. More detail is included here.
In a press release on 17 October 2022, Revenue announced an extension to the Debt Warehousing Scheme so that businesses with warehoused debt do not have to clear the debt or enter into a PPA until 1 May 2024.
More information on these developments is included below.
The Institute has been in ongoing engagement with Revenue on measures to help deal with cash-flow issues for businesses and on clarifications required on tax administration issues the COVID-19 pandemic presented for affected businesses and employees.
We will continue to engage with the Department of Finance and with Revenue on the cash-flow difficulties and the tax administration and payment issues arising for businesses affected by the COVID-19 pandemic and we will update members on this webpage, on Twitter and in TaxFax.
October 2022 – COVID-19 Debt Warehousing Statistics
In March 2021, Revenue wrote to taxpayers and agents in respect of businesses that availed of the debt warehousing to advise that the Debt Warehousing Scheme remained available to support businesses impacted by COVID-19 related trading restrictions. Samples of the letters issued by Revenue are available below:
March 2021 – Letter to taxpayers with returns outstanding and availing of CRSS or EWSS or both (tailored according to the taxpayers circumstances) including details of any debt warehoused and the returns outstanding
In November 2020, Revenue wrote to businesses that qualify for the Debt Warehousing Scheme about the tax liabilities that have been warehoused. Taxpayers with outstanding returns are reminded in the letter about tax returns that are outstanding and need to be filed to retain the debt warehouse status. Samples of the letters issued by Revenue are available below:
October 2020 – eBrief No. 190/20: Budget 2021 – Income Tax Warehousing
June 2021 – Economic Recovery Plan 2021
February 2021 – COVID-19 Resilience and Recovery: The Path Ahead
Department of the Taoiseach
June 2021 – Launch of the Economic Recovery Plan 2021
July 2020 – July Jobs Stimulus
Department of Finance