During the pandemic, the Government introduced a number of measures to help companies and individuals who were facing cashflow difficulties. One of the helpful and widely used measures introduced was the debt warehousing regime whereby companies and individuals could warehouse their VAT, PAYE and Income Tax liabilities that occurred before 31 December 2021.
The main points of the debt warehousing scheme were as follows;
- The scheme allowed for the deferral of unpaid VAT and PAYE debts for businesses restricted from trading due to the Covid-19 pandemic for a period of 12 months after a business resumes trading.
- The debt warehousing scheme also applied to Income Tax. This allowed for the warehousing of the Income Tax liability falling due on 31 October 2021 which comprised of the balancing payment due for the 2020 Income Tax year and Preliminary Tax due for 2021 Income Tax year.
- The debt warehousing scheme was also expanded to include the recovery of any overpayment of the TWSS and EWSS which was paid to employers during the pandemic.
The scheme allowed for the deferral of these unpaid liabilities for an interest free period of 12- months which is ending in most cases on 31 December 2022 and will provide for a reduced interest charge of 3% on those debts from 1 January 2023. In December 2021, Revenue announced that the scheme would extend from 31 December 2021 to 30 April 2022 for certain companies.
In essence, the interest free period for debt warehousing will be coming to an end later this year. If the debts are fully paid off by the end of the year, no interest will occur. Any debt outstanding from 1 January 2023 will have an interest rate of 3% per annum applied to the debt provided a Phased Payment Arrangement (PPA) has been agreed with Revenue in advance.
Revenue have advised that anyone who will have outstanding debt in place going into 2023 will be required to contact Revenue with a payment plan before the end of 2022 outlining how they intend to pay the outstanding liabilities to Revenue. Given we will shortly be entering the second half of 2022 companies should begin thinking about their cash flow management now and the PPA proposal they intend to put forward to Revenue before the end of the year.
If you require assistance in relation to contacting Revenue with your payment plan, we would be happy to assist. You can contact us at email@example.com
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