Revenue confirms implementation of 0% interest rate for liabilities within the Debt Warehouse Scheme
Yesterday (05/02/2024), the Minister for Finance, Michael McGrath T.D., announced that the interest rate applicable to warehoused debt will be reduced to 0% and that the necessary legislation to implement the reduction will be introduced at the next available opportunity. Revenue has confirmed that it will operate the reduced interest rate on an administrative basis pending the legislative change. Revenue has also confirmed that, where a business has already paid warehoused debt which was subject to interest at 3%, it will get a refund of that interest.
Approximately 58,000 individual customers were availing of the Debt Warehouse Scheme (DWS) at 26 January 2024, with a balance of €1.72 billion outstanding. Almost 70% of those customers have warehoused debt of less than €5,000.
Businesses availing of the DWS have until 01 May 2024 to either pay their warehoused debt in full, if they can, or engage with Revenue on addressing the debt, including arrangements for a Phased Payment Arrangement (PPA). Speaking about Revenue’s approach to the payment of warehoused debt, Revenue’s Collector General, Joe Howley, said:
“Revenue has a proven track record in successfully agreeing flexible payment arrangements and over 2,100 businesses have already entered payment arrangements for an aggregate €158 million of warehoused debt.
The Debt Warehouse Scheme was an unprecedented measure introduced in an exceptional period to give viable businesses an opportunity to survive an emergency. Many of the businesses involved had never before built-up debt with Revenue. We are firmly committed to supporting viable businesses that have warehoused debt.
We will provide businesses, having regard to the circumstances of each individual business, with every possible flexibility in managing the payment of their warehoused debt, including the level of down payment, if any, to commence the payment arrangement, an extended payment duration, and the availability of payment breaks and payment deferral if temporary cash flow difficulties arise during the arrangement term.
The essential conditions for success are that current returns and payments are kept up to date and that there is engagement with us about their plans to deal with the warehoused debt.”
It remains a key condition of the DWS that businesses continue to file their current tax returns and pay current liabilities as they fall due. By remaining in the warehouse, businesses will benefit from the 0% interest rate and flexible payment options available in respect of warehoused debt. The consequence of not meeting these conditions is that the warehouse facility is revoked, which will result in the standard interest rate of 10% applying, backdated to when the debt arose, and the immediate enforcement of all outstanding debt, including interest.
Concluding his advice to businesses availing of the DWS, Mr Howley said:
“We want viable businesses to survive and thrive. The purpose of the supports, such as the Wage Subsidy Schemes and the Debt Warehouse Scheme, was to maintain viable businesses and support employment. The success of those supports is clear. We recognise that most businesses continued to be timely compliant through the period and many have paid some or all of their warehoused debt. We are determined that, as we work through the warehoused debt, we will continue to support viable business.
I therefore encourage individual businesses to get ready now and engage with Revenue on addressing their warehoused debt, having regard to their individual circumstances. We are ready to work with businesses so that they can secure the viability of their business into the future, whilst ensuring that their current tax liabilities are filed and paid on time.”
Revenue guidance will shortly be updated to reflect the change announced today. In the interim, an information booklet outlining possible payment options for warehoused debt is available here.