“Warehousing” of COVID-19 related Tax Debts

At the early stages of the COVID-19 pandemic Revenue suspended debt collection and the charging of interest on late payment for the January/February and March/April VAT periods and February, March and April PAYE (Employer) liabilities. These arrangements are further extended to include May/June VAT and May and June PAYE (Employer) liabilities.

Revenue has recently confirmed the following:

• COVID-19 related VAT and Payroll tax debts, due from 1 March 2020 to the date when sectoral restrictions are lifted, will be parked for a period of 12 months. This includes:

1. VAT payable in respect of January/February, March/April and May/June 2020 VAT periods, and
2. February, March, April, May and June 2020 PAYE (Employer) liabilities.

• no interest will accrue on the tax debts during the 12 month period.
• thereafter, the COVID-19 related tax debts will carry a reduced interest rate of 3% (down from 10%), until the debt is paid.
• the timeframe allowed to pay the ‘warehoused’ debt will be flexible and determined by the ability of the business to pay both COVID-19 related debts as well as meeting its ongoing tax liabilities as they arise in the normal course.
• for the warehousing arrangement to apply, all returns must be filed in accordance with the Revenue guidance that has applied since the start of the current pandemic.

SME’s (generally turnover less than €3m with some exceptions) get an automatic deferral, and larger companies with a turnover exceeding €3m get the deferral on request. Larger companies do need to act now in relation to notifying Revenue.

The detailed Revenue commentary is available at:

https://www.revenue.ie/en/corporate/communications/documents/tax-debts-warehousing.pdf

If you have any queries please contact one of the Keogh Ryan Tierney team.