FG
Alan Dillon
I am asking this question on behalf of Deputy Bruton. Will the Minister confirm whether he believes businesses can effectively reduce their tax warehousing debts?
Dail Éireann · 2023-05-09
Part of Other Questions
Party shown is the one held on 2023-05-09, frozen at parse time — not the speaker's party today.
60. Deputy Richard Bruton asked the Minister for Finance if he is satisfied that the debts under tax warehousing can be successfully wound down by businesses; and if he has evolved methods for Revenue of working with companies who may have difficulties. [21510/23]
As of the end of March 2023, the value of debt warehoused was €2.216 billion for 63,600 businesses. Of this total, some 31% have warehoused debts of less than €100; some 15% have warehoused debts of between €101 and €1,000; and a further 19% have warehoused debts between €1,001 and €5,000.
This means that businesses no longer have the challenge of making arrangements to repay their warehoused debt until 1 May 2024. With regard to the repayment of warehoused debt, from 1 May 2024, Revenue’s approach to collecting the tax debt remaining in the warehouse at that time will be flexible and tailored to each business, based on its capacity to pay.
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I am asking this question on behalf of Deputy Bruton. Will the Minister confirm whether he believes businesses can effectively reduce their tax warehousing debts?
The debt warehousing scheme allows for the deferral of the payment of VAT, PAYE and certain self-assessed income tax liabilities, including the temporary wage subsidy scheme, TWSS, and employment wage subsidy scheme, EWSS, overpayments. It provided a vital liquidity support to businesses during the Covid pandemic and continues to support businesses as they recover from the impacts of the pandemic and the energy crisis.
As of the end of March 2023, the value of debt warehoused was €2.216 billion for 63,600 businesses. Of this total, some 31% have warehoused debts of less than €100; some 15% have warehoused debts of between €101 and €1,000; and a further 19% have warehoused debts between €1,001 and €5,000. In total, 41,294 businesses in the warehouse - 65% of the total - have an outstanding balance of less than €5,000. The bulk of the debt figure is warehoused by just 6,462 customers, with outstanding balances greater than €50,000 totalling almost €1.9 billion of the overall figure of €2.2 billion.
Last October, the Revenue Commissioners announced an extension to the period during which debts can remain parked in the warehouse. This means that businesses no longer have the challenge of making arrangements to repay their warehoused debt until 1 May 2024. This significant additional time should greatly support businesses in their recovery from the impacts of the pandemic and the energy crisis and prevent business failure. Importantly also, businesses are still able to avail of the reduced 3% interest rate from 1 January 2023, as opposed to the general interest rate of 10%, when they come to pay the debt.
With regard to the repayment of warehoused debt, from 1 May 2024, Revenue’s approach to collecting the tax debt remaining in the warehouse at that time will be flexible and tailored to each business, based on its capacity to pay. In advance of the repayment date, Revenue will engage with those businesses yet to agree a payment plan, to discuss their payment options and, where required, it will agree a tailored and phased payment arrangement in respect of the parked liability over an agreed timeframe.
From speaking to those who visit my constituency offices, a lot are grappling with the dual pressures of escalating debt and the rising cost of living, compounded by the inflationary environment we are in. We need to ensure that Revenue and the county sheriffs are collaboratively working together and demonstrating compassion with individuals and businesses that are impacted by this. It is paramount that we continue to develop strategies to support those who find themselves in challenging circumstances. I welcome the flexible payment arrangements. That is important, particularly in light of the cost-of-living issues and the ongoing challenges people face. We must stand alongside our local businesses and ensure they can maintain their presence in our towns and villages and that they support employment. I ask that the Government continues to assist companies that might struggle in this process.
It is worth reflecting on the numbers I put on the record and the fact that two thirds of the businesses that have tax debts warehoused owe less than €5,000. I recognise that this is a significant amount of money for a lot of businesses but in the great majority of cases, with goodwill and co-operation between the business and the Revenue Commissioners, it should be possible to put in place repayment arrangements over a period of time. The Revenue Commissioners have assured me that they will be as flexible and supportive as possible. The requirement that people engage with Revenue is important and it is important that we all emphasise the need to do that.
We must also remind businesses that it remains a key condition of the debt warehousing scheme that current liabilities are filed and paid on time. In order to avail of that lower interest rate and flexibility of entering an arrangement between now and 1 May 2024, current liabilities, as they fall due, must be paid and returns must be filed on time. That said, I have discussed this issue with the Revenue, it knows the importance of it for many businesses concerned and I am satisfied that it will engage in a spirit of co-operation to find solutions in individual cases.
I would make a point on some of the letters I have seen that have been issued by county sheriffs locally. They leave a lot to be desired and the language that is being used is challenging for those on the receiving end of them. I want to make that point in the House, while understanding that they are doing their best, in challenging times, to decrease their debt effectively. It only adds to the impact of anxiety and concern when that happens. I appeal to the Minister again to ensure we have the support measures in place. I ask for an update on the temporary business energy support scheme, TBESS, that was previously announced in last year's budget. Where is this scheme in its development process?
It is worth underlining the point that the requirement is to have entered into an arrangement with Revenue by 1 May 2024. It is not that the business has to have repaid the warehoused tax by that date; it just has to have entered an arrangement. Over the next ten to 11 months, I urge businesses to engage with the Revenue Commissioners and put in place that arrangement. I also want to make the point that the arrangements can be over a number of years. Despite the fact that in many cases the amount of money involved is quite low, the Revenue has a track record of entering arrangements over an extended payment duration of up to five years, with the availability of payment breaks and deferrals when temporary cashflow difficulties arise during the arrangement term. The moral of the story is that I am asking businesses to engage with the Revenue Commissioners and to ensure there is an arrangement in place before May of next year.