Businesses have been warned they will not be able to avail of special Covid-19 arrangements to "warehouse" debt to Revenue unless their tax affairs are in order.
As part of a compliance programme to ensure companies are correctly applying for State support through the temporary wage subsidy scheme – and that they continue to need such support – Revenue has reminded business owners to tidy up any other tax affairs outstanding.
The demand for information comes just as thousands of hard-pressed small and medium-sized businesses are trying to reopen their doors to customers for the first time in more than three months after the Covid-19 economic lockdown.
In a letter to every one of the 55,500 companies that have availed of the temporary wage subsidy, Revenue warns: "It is important to note that employers cannot avail of the 'debt warehousing' arrangements being introduced by Government in respect of PAYE and VAT liabilities that have arisen due to Covid-19-related trading restrictions if there are outstanding tax returns."
It also identifies, where relevant, outstanding issues that employers need to deal with under the new real-time PAYE modernisation programme introduced last year and any tax returns that are due but have not yet been filed.
Under the debt warehousing arrangement, announced by the government in May, Revenue deferred payment of VAT and PAYE liabilities – income tax, universal social charge and PRSI – for businesses that were either closed or significantly disrupted due to the Covid-19 economic restrictions.
All small and medium businesses are automatically entitled to avail of the scheme. Bigger businesses can apply for inclusion.
The relief covers VAT debts dating from the start of 2020 and PAYE liabilities from February.
Under debt warehousing, no VAT or PAYE is collected for the affected period and for two months after businesses resume normal trade. This uncollected debt is then “warehoused” for a further 12 months with 0 per cent interest. However, any new VAT and PAYE amounts owed in that 12-month period must be paid.
After the 12 months expire, the businesses will continue to benefit from a reduced interest charge of 3 per cent per annum, rather than the usual 10 per cent annual charge on overdue amounts.
Although pursuit of money owed is suspended, employers are still obliged to file the returns for the affected period to keep track of what is owed.
Failure to have their affairs in order will see companies excluded from the scheme and charged normal interest on all tax bills outstanding. Businesses have been given just five working days to sort out all issues related to the temporary wage subsidy scheme and other debt warehousing in the letters, which Revenue has started issuing this week.
"We would recommend employers undertake a tax health check in advance of responding to Revenue in order to mitigate any further queries or potential exposure to statutory interest and tax geared penalties," said Deloitte tax partner Daryl Hanberry.
“This compliance programme will be a key part of Revenue’s audit/intervention programme for the foreseeable future and in many instances be a stepping stone to the identification of other tax considerations,” he warned.