Changes announced to the Tax Debt Warehousing Scheme: 0% Interest Rate on Warehoused Debt

In an unprecedented move to benefit countless businesses across Ireland, the Minister for Finance, Michael McGrath T.D., announced an adjustment to the Tax Debt Warehousing scheme on 05 February 2024. The highlight? 

The interest rate for warehoused tax debt dropped to 0%.

Refund of Interest paid

For businesses that set up an agreement and paid their warehoused debt at the previous rate of 3%, there's good news on the horizon. The Revenue has pledged to refund the interest paid, ensuring fairness and support for all taxpayers.

Flexible Payment Solutions in Challenging Times

The announcement also sheds light on Revenue's commitment to flexibility. Businesses struggling with cash flow can look forward to tailored payment arrangements, potentially extending beyond the typical three to five years. Moreover, an initial down payment might not be mandatory, easing the financial burden on businesses aiming for recovery.

Businesses availing the Debt Warehousing Scheme have until 1 May 2024 to take one of the following actions:

• Settle their warehoused debt in full, if possible.
• Or, discuss with the Revenue how to manage the debt, including setting up a Phased Payment Arrangement (PPA).

Companies will receive maximum support in arranging the repayment of their warehoused debt. This support includes:

• Deciding on the initial payment, if required, to start the repayment plan.
• The possibility of extending the repayment period.
• The option for payment holidays and deferral in case of short-term financial issues during repayment.

It's crucial to stay current with your tax filings and payments and to communicate with the Revenue Commissioners about your warehoused debt.

To continue benefiting from the Debt Warehouse, you must:

• Keep filing your tax returns on time.
• And pay any ongoing tax liabilities as they come due.

Staying in the scheme allows you to enjoy a 0% interest rate and flexible repayment options for your warehoused debt. Failing to adhere to these requirements will lead to your removal from the Debt Warehouse. Upon removal, the following consequences apply:

• The warehoused amounts will need to be paid immediately.
• You may face debt collection actions.
• And will incur interest charges at annual rates of 8% or 10%.
  

Staying Compliant

For businesses taking advantage of the DWS, adhering to current tax obligations and maintaining open communication with Revenue are non-negotiable. With the 1 May deadline looming, Revenue is encouraging early engagement to explore the flexible options available. It's crucial to submit current tax returns and payments on time to avoid the revocation of the warehousing facility, which would lead to the application of standard interest rates and the immediate enforcement of outstanding debts.

Should you encounter challenges with your obligations under the DWS, reach out to our tax team for possible assistance.