The Government originally introduced the Debt Warehousing Scheme (DWS) as part of the July 2020 Stimulus Package to support businesses who had cashflow and trading difficulties due to the Covid-19 pandemic.
Under the DWS, the Government legislated to allow for business debt associated with the Covid-19 pandemic to be deferred or ‘warehoused’.
The DWS applies to the following taxes:
To qualify for the DWS, it is necessary that all tax returns be filed in a timely manner even if the liability cannot be paid. The business’s current taxes must also be paid as they fall due.
Most qualifying businesses had until the 1 May 2023 to clear its warehoused debt at an interest rate of 0% or agree a Phased Payment Arrangement with Revenue for the warehoused debt at a reduced interest rate of 3%, as opposed to the general interest rate of 10%.
Due to the significant challenges arising from the energy crisis and continued financial pressure as businesses recover from the Covid-19 pandemic, Revenue have extended the DWS timeline from the 1 May 2023 to the 1 May 2024. This will allow businesses in Ireland to have an additional year to clear its warehoused debt (at 0% interest) or enter into a Phased Payment Arrangement with Revenue (at 3% interest).
A recent publication from Revenue showed that at the end of September 2022:
Revenue recommends those who are eligible for the scheme should carry out a self-review of their taxes. If the review indicates that the taxpayer has not declared the full amount of tax due, they should submit an Unprompted Qualifying Disclosure by 31 January 2023 to avail of the reduced rates on any additional liabilities.
Collector-General, Mr. Joe Howley, commented on the extension of the DWS stating that:
“the scheme continues to be important in sustaining employment and viable businesses. The extension announced today will give businesses some certainty as they head into the end of 2022 and plan for 2023 and reflects Revenue’s willingness to work with businesses to deal with the challenging economic and business environment in which they are currently operating.”