Revenue warehouses up to €3.2bn in business tax debt

Up to €3.2 billion in tax debt – linked to 105,000 businesses financially affected by Covid restrictions – is currently being parked by the Revenue Commissioners via its debt warehousing scheme, the Minister for Finance has confirmed.

Paschal Donohoe was replying to Dáil questions, during which he also ruled out the Government seeking to recoup employer wage subsidy scheme (EWSS) payments to companies that paid shareholder dividends or staff bonuses during the pandemic.

The Revenue Commissioners confirmed that of the €3.2 billion warehoused tax debt, the bulk of what is owed is VAT, at €1.49 billion, and employers’ PAYE, PRSI and other payroll deductions at €1.59 billion.

The 105,000 businesses include 3,200 “large cases and medium enterprises division” taxpayers, Revenue said.

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‘Tailored plan’

A spokeswoman for Revenue said that the warehoused tax remained “parked” on an interest-free basis in the “debt warehouse” for a full 12 months before it became collectable.

“This means that there is no requirement to pay for most businesses until at least January 2023. At the end of the period, a tailored plan will be agreed with the businesses appropriate to their economic circumstances at that time,” she said.

The spokeswoman went on to say that the new statistics showed “there are small signs within the data to suggest that some businesses have already begun to pay some of the debt previously warehoused”.

An interest rate of 3 per cent per annum will apply to unpaid tax debt from 2023 and the spokeswoman said that this “was a significant reduction from the standard interest rates of 8 per cent and 10 per cent per annum that normally apply to late payments of tax”.

In written replies to TDs Aodhán Ó Ríordáin and Bernard Durkan on Covid-19 supports, Mr Donohoe said that, along with the €3.2 billion tax warehoused, the overall support provided by the Covid-19 wage subsidy schemes was " in excess of €10 billion".

Payments

Figures from Revenue show there are 171,700 workers employed by 14,600 employers in receipt of EWSS payments – down from 280,400 employees on the scheme in December.

A total of €353.7 million has been spent on EWSS payments to date this year.

In his written reply to Mr Ó Ríordáin, Mr Donohoe said the fact that the EWSS legislation did not prohibit the paying out of dividends or bonuses meant “it would not seem reasonable or indeed practicable to retrospectively seek to recoup subsidy payments where companies complied with the legislative requirements in place in relation to the supports”.

“Without the support of EWSS, many businesses would simply not be in existence today and would certainly not be in a position to adapt as responsively as they have to the reopening of all sectors of our economy,” he said. “The EWSS operates as a highly effective and responsive instrument.”