During the pandemic, over 100,000 businesses opted to ‘warehouse’ some or all of their self-assessed tax liabilities. More than half have since paid these back, but the clock is now ticking for those businesses that still owe taxes they parked under the Tax Dept Warehousing scheme.
At the beginning of 2024, Revenue confirmed that debt amounting to €1.72 billion was still warehoused for 57,435 customers, of which almost 70% was for amounts less than €5,000. The bulk of the debt (€1.47 billion) was warehoused by 5,265 customers with outstanding balances greater than €50,000.
All businesses availing of the warehousing scheme have until 1 May 2024 to either pay their warehoused debt in full or engage meaningfully with Revenue in order to set up a personalised Phased Payment Arrangement (PPA).
The Tax Dept Warehousing scheme
For a period of time, warehoused tax was subject to a 3% interest rate, however this was recently reduced back to 0%, and any interest paid will be refunded. For those businesses that connect with Revenue to organise a structured repayment under a Phased Payment Arrangement, they are taking a flexible approach to downpayments, payment breaks, and the duration of the repayment.
However, it is vital that you continue to file your current tax returns and pay current liabilities as they fall due. Failing to do so could lead to your warehouse facility being revoked and any outstanding tax liabilities becoming liable to interest at the standard rate of 10% (and backdated to when the debt arose).
Applying for a PPA is fairly straightforward, so let’s take a look at what’s involved.
How to apply for a Phased Payment Arrangement
Apply for your PPA online within ROS. You will find the link on your My Services main dashboard – scroll right down to the bottom and look for Phased Payment Arrangement to the left of the Other Services section. If you click this, you’ll be able to initiate a new PPA application.
Although the application will be submitted through ROS, it does involve downloading and completing a PDF application called the ePPA1. You can download the ePPA1 form in advance from Revenue, but you will also be able to download it as you go through the online PPA process.
During the application process, you will be asked to:
- select your repayment period (maximum 60 months)
- select your downpayment amount
- provide your bank details
- select your preferred repayment date.
- upload the completed ePPA1
For larger debts, you may also be asked to submit additional information or documentation such as
- bank statements
- six-month cash-flow projections
and - management accounts
All requests for a PPA are reviewed by Revenue, and you will receive a response to your application within 10 days. If Revenue needs further information, you will receive a notification through ROS. If you do not respond in the timeframe specified, your application will be automatically cancelled.
Is your business viable?
As you can see from the ePPA1 form, Revenue is looking for details about the financial health and future of the business, including why you were unable to meet the tax debts when they were due and what efficiencies you have implemented in the business. They want to know your business is otherwise viable, especially if you are opting for a longer repayment term.
You’ll also need to explain how you plan to meet your warehouse repayments on top of meeting future tax liabilities that come due. This is because it’s a condition of the PPA that you can keep all your current taxes up to date. If you fail to pay your current taxes or miss one of your payments, Revenue do not have to continue with the PPA and this can be the start of a quick downward spiral if badly managed. In this scenario, Revenue has various enforcement option available, including collection through the courts or even liquidation.
Action by the sheriff is the most frequently used enforcement option by Revenue. If the sheriff gets involved, your problems can become exacerbated. This is because the sheriff charges a percentage of the liability along with interest due and an execution fee. Their charges are calculated at 5% of the first €5,500, and then 2.5%of the balance of that amount. As you can see, depending on the size of the debt being collected, these extra charges can be really significant.
PPAs and Tax Clearance Certificates
A fantastic benefit of the PPA that not many people realise is that it makes you eligible for investment and bank loans because you are no longer non-compliant. Once you are keeping up with your payments, you can get a Tax Clearance Certificate with an outstanding PPA. This can be hugely beneficial for a business looking to trade themselves out of a problem.
This was very helpful for one of our clients who relied on Pobal funding to keep their crèche up and running. Once they were missing tax payments, they were considered non-compliant by Revenue and the grant stopped feeding into the business. By applying for a PPA they were able to save their business from being run into the ground because once they were making regular payments to clear their debt as well as keeping up with current tax payments, they could be reissued a Tax Clearance Certificate and apply for funding again!
If you’re struggling to pay your business taxes – whether warehoused taxes or not – Revenue’s Phased Payment Arrangement is a great way to clear your debt. PPAs are a fantastic way to ease your business through a challenging time, but be realistic about your repayments and make sure to prioritise your repayments once the PPA is in place.
