The vast majority of tax that businesses deferred through a Government scheme during the Covid-19 pandemic has now either been paid or is in the process of being paid.
About 93 per cent of the €3.2 billion worth of tax deferred under the debt warehousing scheme has now been either paid in full, secured under a so-called phased payment arrangement (PPA), is subject to ongoing PPA negotiations or refunds and credit claims which are awaiting approval to be offset against the outstanding balance, the Revenue Commissioners said in a statement on Wednesday.
The debt warehousing scheme allowed companies to temporarily defer VAT and employer PAYE, some self-assessed income tax liabilities, and Temporary Wage Subsidy Scheme and Employment Wage Subsidy Scheme overpayments for an extended period of time. The scheme was part of a wider effort to keep businesses going that would otherwise have struggled to survive the impact of the pandemic and Government lockdowns.
“The scheme successfully offered valuable and practical liquidity support to businesses by assisting with their cash flow, thereby preventing business failure,” Minister for Finance Michael McGrath said in a statement in response to Revenue’s update. “For those customers who have agreed PPAs, it is important to note that in order to retain the 0 per cent interest rate it remains a key condition that current taxes are filed and paid as they fall due, and that all monthly payments are honoured as agreed,” he added.
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At its peak in January 2022, about 105,000 businesses had deferred €3.2 billion worth of tax payments. The vast majority of that was VAT and payroll taxes. Companies had until the start of May to engage with Revenue on how they would pay the tax they had deferred, and Revenue said it had seen a rush from firms to settle their affairs by that date. It collected about €100 million of warehoused tax last month, while PPAs accounting for €973 million were hammered out after April 1st. About €284 million has been formally collected so far this year.
[ Demands issued to almost 12,000 businesses with warehoused debtOpens in new window ]
Of the outstanding €300 million of unpaid tax, Revenue has deemed €120 million as “uncollectable” while another €80 million is “under negotiation”. It is pursuing debts of about €100 million. While the tax could be deferred interest free, companies which have not engaged with Revenue on how to pay their debts face interest rates of up to 10 per cent on what they owe.
There are now more than 12,500 PPAs in place covering debts of €1.2 billion, Revenue said. More than a third of those are with companies based in Dublin and they account for close to more than half the total cash outstanding.
The majority of those PPAs are with companies in the wholesale and retail sectors, hospitality and construction as well as so-called professional and technical industries. Those sectors were hit particularly hard by the restrictions on economic activity during the pandemic.
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