Revenue recently reminded businesses that were to resume trading, once lockdown ended, that their Debt Warehousing Scheme was still in operation. The process of debt warehousing essentially allows businesses to “park” their debts for a period of time in order to support cash flow when the company resumes trading. This will have been an invaluable asset to many companies, who may otherwise have struggled to reopen their doors following the Covid-19 lockdowns, however, this has naturally not come without drawbacks.
One issue for businesses to be aware of this scheme is if the company were availing of Debt Warehousing for PAYE employer liabilities, any directors or employees with a material interest in the company cannot claim for taxes deducted if these have been warehoused and not paid over to Revenue. This may mean that individuals could find themselves personally liable for PAYE deducted but not paid. While this is unlikely to become a major stumbling block, this is one issue that has not been widely spoken about but you very much need to be aware of it.
The system was put in place to ensure that cash flow would remain available to businesses at a time of need, with some 86,000 businesses availing of the scheme. The scheme has provided approximately €2.3 billion of cash flow to businesses and is now being extended to the end of 2021, with no interest during 2022 and a rate of 3% applying thereafter.
Revenue has assured businesses that payment terms will be flexible at the end of the term. This will also be determined by the company’s capacity to pay these arrears at the same time as paying their current liabilities. Collector General Joe Howley has stated that:
“This initiative gives viable businesses the opportunity to survive the economic shock of the pandemic and to hopefully thrive as the economy recovers. We will be in contact with each business that is availing with the Debt Warehousing Scheme to explain how the arrangements will operate for their business. The flexibility around debt that is warehoused will allow businesses additional time to get back on their feet after re-opening”.
It is important to remember that even businesses availing of this scheme must file all tax returns as soon as they are due.
Business Advisor Dublin | Expert Advice for Your Business Growth
Looking for an expert business advisor in Dublin to help your business grow? Our team of experienced advisors provides valuable insights on marketing, sales strategies, financial planning, and more. Get the competitive edge you need to succeed in today’s market. Contact us today and see how we can help your business reach new heights!
We hope that this information has been useful for you and as always, please don’t hesitate to contact us here at EcovisDCA where we remain open and ready to help. Please do not hesitate to contact us.