Ireland has launched a generous tax debt "warehousing" scheme, which will enable businesses whose turnover will have dropped due to the COVID-19 pandemic to freeze certain tax payments for 12 months.
Under the scheme, announced in May, the Irish Revenue is allowing Irish businesses to freeze payment of value-added tax and employer payroll taxes. The scheme is available for those businesses who have been unable to trade due to COVID-19 restrictions or whose trading has been restricted.
For the lengthy period covered by the scheme, Revenue will not seek to collect any debts that develop and, for most businesses, no interest will accrue.
- Ireland To Expedite Payment Of The Research And Development Tax Credit
- The Tax Reliefs Currently On Offer In Ireland
- Close Companies In Ireland Allowed Longer To Distribute Income
- Ireland Delays Real-Time Reporting for Dividend Withholding Tax
The freeze will apply to taxes falling due for as long as there are restrictions in place on a business's trading and for two months thereafter. Following the resumption of "normal" trading, the outstanding VAT and PAYE (employer) tax debts will be warehoused for 12 months, during which there will be no collection of this debt by Revenue.
Revenue will grant automatic relief from interest on tax debts for small and medium-sized businesses (SMEs). Relief may be granted on request for larger businesses.
In two separate announcements, Revenue has specifically confirmed that this automatic interest relief for SMEs extends to:
- January/February and March/April VAT;
- February, March, and April PAYE (employer) liabilities;
- May and June PAYE (employer) liabilities normally due in June and July, respectively; and
- May/June VAT liabilities, normally due in July.
An SME is a business with turnover of less than €3m that is not dealt with by either Revenue's Large Corporates Division or the Medium Enterprises Division.
Businesses other than SMEs can receive support by contacting the Collector-General's office through MyEnquiries or alternatively they can engage directly with Revenue's Large Corporates Division or Medium Enterprises Division.
Revenue has stated:
"It is important that businesses, which may be facing difficulty in paying their taxes for the first time, know that we will work with them to resolve their tax payment difficulties. With early and meaningful engagement, we can generally agree payment arrangements that are acceptable to both the business and Revenue."
Businesses should keep up with their other VAT and PAYE obligations. To benefit from the scheme, taxpayers must have filed all relevant returns relating to the restricted trading phase.
If they have estimated their liability for any period, a correct return must subsequently be filed for the debts to benefit from the warehousing provisions. These alterations can be made on a self-correction basis, without the application of penalties.
The scheme offers a considerable boost for businesses' cash flow. Typically such debts would be subject to interest at a rate of 10% per year. Where tax debts remain outstanding after the 12-month freeze a concessionary interest rate of 3% will apply.