As the deadline of April 30, 2024, approaches, individuals and businesses in Ireland with “warehoused” tax debts must take decisive action to address their outstanding obligations. This critical date marks the last opportunity for taxpayers to make arrangements for their warehoused tax debts under the current terms offered by the Revenue Commissioners. The concept of warehousing tax debts emerged as a pivotal response to the financial strain induced by the COVID-19 pandemic, providing a lifeline to those significantly impacted by the crisis.
If you have warehoused tax debt and you have not yet submitted an application to Revenue for a Phased Payment Arrangement, we would urge you to contact a Xeinadin advisor immediately. Failure to reach an agreement with Revenue by 30th April 2024 will result in the removal of all protections granted by the warehouse scheme from Revenue interest and penalties. If you are unsure whether or not you have warehoused debt, please contact us and we will be able to confirm.
Understanding warehoused taxes
Warehousing tax debts is a relief measure introduced by the Irish Revenue to support businesses experiencing cash flow difficulties due to the COVID-19 pandemic. This initiative allows certain tax liabilities—such as Value-Added Tax (VAT) and Pay As You Earn (PAYE) liabilities—to be “warehoused” or deferred for a period without accruing interest. The aim was to alleviate immediate financial pressures on businesses, thereby enabling them to maintain operations and safeguard employment.
Key features and eligibility
To date, there has been no requirement to repay warehoused tax debts and Revenue confirmed earlier this year that no late payment interest would apply to taxes which are repaid via the warehouse scheme. In order to retain access to the warehoused scheme, taxpayers must comply with the following conditions:
- Apply for and reach agreement with Revenue on the phased repayment of tax debts before 30th April 2024, with downpayment required on that date, and monthly repayments to commence in May.
- Ensure that all other tax filings and liabilities remain up to date throughout the repayment term.
Failure to comply with these conditions will lead to tax debts being removed from the warehouse and backdated penalties and interest becoming applicable.
Please note that the extent of the downpayment required by Revenue is dependent on whether or not you or your business require tax clearance. If you do, the downpayment must be at least 40% of the outstanding warehoused debt. In some cases, the Revenue Commissioners have shown some flexibility in relation to the terms of arrangements that are being put in place, but the requirement to have an arrangement finalised and in place prior to the 30th April 2024 deadline remains unchanged.
The maximum repayment term that Revenue will consider is 60 months.
The importance of the April 30 2024 deadline
The upcoming deadline holds significant implications for taxpayers with warehoused debts. By this date, affected individuals and businesses are required to engage with the Revenue Commissioners to formalise repayment arrangements for their deferred tax debts. Failure to do so could result in the lapse of the favourable terms initially granted, potentially leading to the imposition of standard interest rates and enforcement actions for recovery of the owed taxes.
Action steps for taxpayers
1. Review Your Tax Status: It’s crucial to have a clear understanding of your warehoused tax debts and current tax compliance status. Ensuring that all returns are filed up to date is a prerequisite for maintaining eligibility for favourable terms.
2. Engage with Revenue: Proactively contact the Revenue Commissioners to discuss your situation. Revenue is keen on supporting businesses and individuals through tailored payment arrangements that reflect their capacity to pay.
3. Seek Professional Advice: Consider consulting with a tax professional or advisor. They can offer guidance on the best course of action, help negotiate terms with Revenue, and ensure that your tax strategy aligns with your business or personal financial planning.
4. Formalise a Payment Plan: Agree on a realistic payment plan with Revenue that suits your financial situation. This plan must be adhered to, to avoid potential penalties or loss of the preferential terms provided by the warehousing scheme.
Looking ahead
The warehousing of tax debts represents a significant measure of support for Irish businesses and individuals during an unprecedented economic challenge. As the deadline approaches, taking timely and informed action is paramount. The focus must be on securing an arrangement that ensures compliance and sustainability, paving the way for recovery and growth in the post-pandemic era.
For those affected, the remaining time leading up to April 30, 2024, should be used wisely to assess options, engage with advisors, and make necessary arrangements with the Revenue Commissioners.
