Revenue to contact businesses as a reminder of the importance of continuing to file timely tax returns
Today (3/3/2021), Revenue confirmed that the Debt Warehousing Scheme remains available to support businesses impacted by continuing COVID-19 related public health restrictions. The scheme is automatically available to businesses and individuals that are managed by Revenue’s Business and Personal Divisions. It is also available by agreement to larger businesses managed by Revenue’s Large Corporates and Medium Enterprises Divisions, where such businesses have been adversely impacted by COVID-19.
Under the scheme, businesses can temporarily ‘park’ certain tax debts while trade is impacted by COVID-19 restrictions. These debts remain ‘parked’ on an interest free basis for 12 months following resumption of ‘normal’ trading. At the end of the 12-month interest free period, if the warehoused debt has not been paid in whole or in part during that time, the balance can be paid through an agreed phased payment arrangement at a significantly reduced interest rate of 3% per annum. The standard interest rates for such tax debts are 8% and 10% per annum.
Currently, there are approximately 70,000 businesses availing of the scheme covering €1.9 billion in tax debt. Approximately 26,500 of these businesses are also claiming support under the Employment Wage Subsidy Scheme (EWSS) and/or the Covid Restriction Support Scheme (CRSS). In the last month, a total of €324 million in EWSS and CRSS payments have been made to these businesses.
To avail of the Debt Warehousing Scheme, all tax returns must be filed as they fall due. Of the 70,000 businesses availing of the scheme:
- 41,300 are continuing to file their tax returns as they fall due
- 28,700 have some outstanding returns.
Approximately 22,000 of the businesses that remain compliant with the terms of the Debt Warehousing Scheme by continuing to file their tax returns received €284 million in EWSS and CRSS supports during the past month.
Also, however, approximately 4,500 of the businesses that have not kept up to date with filing their tax returns are nevertheless regularly submitting claims for support under the EWSS and/or CRSS. In the last month subsidy payments amounting to €40 million were made to these businesses.
Reminding businesses of the importance of continuing to file timely tax returns, Collector-General Joe Howley said:
“A key condition for businesses to continue to avail of the Debt Warehousing Scheme is that all tax returns must be filed as they fall due. This is the case even where the liability cannot be paid or where, for example, the liability may be nil if the business is not currently trading due to COVID-19 restrictions. Once tax returns are filed, the tax liabilities, if any, are quantified and qualify for the warehousing scheme. Revenue will shortly write to the businesses currently availing of the scheme to remind them of the requirement to continue filing their returns, and of the importance of bringing any outstanding returns up to date.”
On 13 March 2020, Revenue put a series of measures in place to assist businesses experiencing trading difficulties caused by the impacts of COVID-19, including in relation to the retention of tax clearance in circumstances where tax payments and tax returns were not up to date. The Government’s July Jobs Stimulus Package subsequently provided for Revenue to ‘warehouse’ deferred tax debts associated with the COVID-19 crisis. This gives businesses availing of the Debt Warehousing Scheme a framework within which they can retain tax clearance where tax payments are not up to date. The only requirement for businesses currently in the Debt Warehousing Scheme to retain tax clearance, which is a key eligibility requirement for access to the EWSS and the CRSS, is to continue to file accurate and timely tax returns. Revenue has confirmed that the real-time updating of the tax clearance system will recommence shortly, noting that tax clearance will be withdrawn where tax returns are not up to date. This in turn will mean that a key eligibility requirement for EWSS and CRSS payments will not be satisfied and, in such circumstances, the relevant business will not qualify for these subsidy payments.
Highlighting the possible long-term negative impacts for businesses who qualify for the Debt Warehousing Scheme but who do not keep filing their tax returns, Mr. Howley said:
“Where tax returns are not kept up to date, access to the Debt Warehousing Scheme, including the reduced 0% and 3% interest rates, may be withdrawn. This would mean the tax debt of the business is no longer ‘parked’ and the tax liability is regarded as outstanding. This would then have a knock-on effect on the tax clearance of the business, which can only be retained outside of debt warehousing where all tax returns and payments are fully up to date. As tax clearance is a key eligibility requirement for businesses availing of support under the EWSS and the CRSS, its loss would obviously have serious financial consequences due to the suspension or delay of subsidy payments.It is therefore very important for businesses to understand the integral link between the Debt Warehousing Scheme and retaining tax clearance, which is the filing of accurate tax returns on time. Consistently meeting this single obligation means businesses can remain in the Debt Warehousing Scheme, keep their tax clearance and, where they are eligible, continue to access EWSS and CRSS support payments. Without tax clearance access to vital liquidity support provided by the subsidy schemes will be withdrawn.”
Finally, Mr. Howley reminded businesses not impacted by COVID-19, or who are not in the Debt Warehousing Scheme, that they must continue to file their tax returns on a timely basis and pay the liabilities owed as they fall due.
“Back in March 2020, Revenue suspended the application of interest on late payments and debt enforcement activity for businesses with cashflow and trading difficulties arising from the impacts of COVID-19. However, many businesses are not impacted by COVID-19 and have continued to operate at their usual or, in some instances, at enhanced turnover levels throughout the pandemic. Most of these businesses continue to meet their timely tax return filing and payment obligations, which is reflected in the February Exchequer receipts and is also evidenced by continued strong timely compliance rates. However, a small number of these businesses are not taking the necessary due care to ensure they meet their timely tax return filing and payment obligations and are now the focus of our attention. We will also be contacting these businesses over the coming weeks to outline that if their filing and payment issues are not quickly rectified they will be subjected to debt collection and enforcement action, including interest charges at the standard rates of 8% and 10%, as appropriate.”
Detailed information regarding Debt Warehousing, including a list of frequently asked questions (FAQs), is available here on www.revenue.ie. Customers seeking any additional advice or assistance can contact Revenue through MyEnquiries, Revenue’s secure online contact facility, available in both myAccount and ROS, or at telephone number 01-7383663 (Mon – Fri 9:30am to 1:30pm).
Also, today (3/3/21), Revenue confirmed it will not apply a late filing surcharge to Corporation Tax returns (Forms CT1) for accounting periods ending in June 2019 onwards, including all accounting periods in 2020. This concession will remain in place until 30 June 2021. However, notwithstanding this concessionary arrangement, Revenue strongly encourages corporates to file any outstanding Forms CT1 as quickly as possible. Revenue will shortly be issuing reminder notices to any corporate whose Form CT1 remains outstanding for an accounting period ending in the 6 months to 31 December 2019. If, following the receipt of a reminder notice, the Form CT1 remains outstanding, the corporate will no longer qualify for tax clearance. This, in turn, will mean that access to the key EWSS and CRSS supports will be withdrawn. The position regarding the late filing surcharge will be kept under review.