Important Update for Business Owners: Changes to the Debt Warehousing Scheme

The Minister for Finance made an announcement on February 5th that brings positive news for businesses participating in the Debt Warehousing Scheme (DWS). The interest rate on warehoused tax debt is being reduced from 3% to an incredible 0%. This means that any business that has been paying off tax debt under the scheme will benefit from this reduction, and those who have already paid interest at the previous rate will receive a refund. 

For businesses utilising the DWS, it’s important to note that there is a deadline approaching. By May 1, 2024, businesses must either settle their warehoused tax debt in full or engage with Revenue to discuss how to manage the debt, which could include setting up a Phased Payment Arrangement (PPA).

This update from Revenue signals a strong commitment to supporting businesses that are working towards resolving their tax debts. The elimination of the interest rate is a significant step towards easing the financial pressures on businesses.

Mr. Howley concluded his statement by saying:

“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.” 

The key conditions for businesses availing of DWS are that they comply with their current tax obligations as they fall due and they engage with Revenue about their plans to deal with the warehoused debt. Revenue has encouraged early engagement as the 1 May deadline is approaching. 
 
Submitting current tax returns and payments on time remains an essential condition to remain in the DWS (and benefit from the 0% interest rate and flexible payment options). If this condition is not met, the warehouse facility is revoked. This will result in the standard interest rates of 8% (Corporation Tax/Income Tax) and 10% (PAYE/VAT) per annum applying, backdated to when the debt arose, and the immediate enforcement of all outstanding debt, including related interest. 

Revenue has updated its website for this change. Further updates to the Information Booklet on Debt Warehousing will follow shortly.

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