Debt Warehousing Scheme
The Debt Warehousing Scheme was brought into effect by Revenue in order to support and assist businesses experiencing cashflow and trading difficulties due to the COVID-19 pandemic. This allowed businesses to defer paying tax liabilities to a later period, when the business can financially pay the debt off.
In order to qualify for the Debt Warehousing Scheme, the business must have been unable to pay their tax liabilities due to COVID-19 restrictions, along with the following:
- The business turnover was significantly reduced
- The volume of customer orders was significantly reduced
Small and Medium Enterprises (SMEs) managed by the Personal or Business Division in revenue, will automatically enter the debt warehousing scheme. An SME in this context is a business where annual turnover is less than €3 million.
Other businesses (turnover above €3 million) which are managed by Large Corporates Division and Medium Enterprises Division must apply for warehousing.
VAT, PAYE (Employer), Income Tax and TWSS/EWSS repayment debts can only be warehoused under this scheme.
There are three periods/phases that break down the warehouse scheme.
Period 1 – This phase ends on 31 December 2021. Relevant tax debts incurred during this period can be warehoused. There will be 0% interest applied to Period 1.
Period 2 – Phase from 1 January 2022 to 31 December 2022. Interest rate applied is also 0%
Period 3 – Phase of indefinite duration commencing 1 January 2023. 3% interest applied to warehouse debt from start of Period 3 to date the debt is discharged. Customers should contact Revenue with the repayment plan for warehoused debt before 31 December 2022.
As you can see from the above dates 0% interest is applied and will continue to be 0% interest until 31 December 2022.
From 1 January 2023 interest will be applied at a lower rate of 3% per annum until the debt is fully discharged. At this point a direct debit plan will be available to put into place to pay the remaining debt to Revenue.
For more information on the Debt Warehousing Scheme, please see attached link.