Revenue extends deadline for businesses to repay Covid-era tax debts

Rising energy costs have prompted Revenue to give businesses an extra 16 months to pay off almost €2.6 billion in Covid-era debt.

Businesses owe Revenue €2.58 billion in debt built up or “warehoused” since 2020 under a scheme to aid them in weathering the pandemic storm.

The State’s tax collector said on Monday that it would extend the deadline for repayment of this money to May 1st 2024, from an original due date of January 1st next, or May next year for organisations already due extensions.

This means that businesses now have until May 1st 2024 to pay off the warehoused taxes they owe or to agree a phased repayment deal with the State.

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Revenue added that it would continue to charge the special 3 per cent rate on the debt from January 1st, rather than the 10 per cent that would normally apply.

Joe Howley, collector general, said Revenue appreciated that rising energy and other costs posed significant challenges to businesses trying to pay their taxes.

He argued that the longer deadline and reduced interest rate would give firms greater certainty. “Where a business has the capacity to repay any or all of the debt warehoused in the meantime, they can of course do so,” Mr Howley added.

Revenue’s move follows warnings that post-pandemic inflation has left businesses unable to repay the cash within the existing deadline.

Writing in The Irish Times , Adrian Cummins, chief executive of the Restaurants Association of Ireland, said that his industry owed €900 million in pandemic debt.

He called on Minister for Finance Paschal Donohoe to extend the warehouse scheme “for the full duration of the energy crisis”, which mostly affects low-margin, small businesses.

Revenue numbers show that 7,500 taxpayers are responsible for €2.2 billion of the €2.58 billion total.

Almost 50,000 entities owe sums of less than €5,000 each, while more than 27,000 owe more than this amount, according to those figures.

Mr Howley noted that at peak, businesses owed €3.1 billion through the warehousing scheme. “The scheme continues to be important in sustaining employment and viable businesses,” he added.

According to Mr Howley, taxpayers that owe more than €5,000 each include around 19,000 companies employing 315,000 people.

He maintained that the extension reflected Revenue’s willingness to work with businesses trying to deal with current challenges. Businesses have to keep current returns and payments up to date in order to avail of the scheme.

Mr Howley warned that it was vital for anyone facing temporary difficulties in meeting these liabilities to contact Revenue as soon as this happens.

“Early engagement allows us to work proactively with the business concerned towards finding an agreed solution to those temporary difficulties,” he said.

He added that the agreed solution would allow firms to remain in the debt warehousing scheme.