The Government programme, introduced during the Covid-19 pandemic, allowed businesses to defer taxes temporarily, and currently, around 93% of the total €3.2 billion tax that was deferred has been paid, or is being settled. According to a statement from the Revenue Commissioners, this amount is either fully paid, guaranteed under a phased payment arrangement (PPA), subject to ongoing PPA discussions, or comprises rebates and credit claims waiting for approval to be balanced against the outstanding sums.
The tax delay scheme permitted firms to postpone VAT and employer PAYE, some self-assessed income tax liabilities, and overpayments of Temporary Wage Subsidy Scheme and Employment Wage Subsidy Scheme, for an extended duration. The programme was central to a broader initiative aimed at helping businesses that might otherwise have collapsed due to the pandemic’s impact and the subsequent government-imposed lockdowns.
Finance Minister, Michael McGrath, responding to Revenue’s update, claimed the scheme successfully offered much-needed and pragmatic support to businesses, enhancing their cash flow and preventing business failure. Also, he emphasised that those customers who have agreed to PPAs need to maintain the 0% interest rate by ensuring they file and pay all current taxes on time and honour all monthly payments as agreed.
As of January 2022, almost 105,000 businesses had deferred €3.2 billion in tax payments, mainly comprising VAT and payroll taxes. Businesses had until early May to negotiate payment of their deferred taxes with Revenue. Revenue reported a surge in firms seeking to settle their balances by the May deadline. It retrieved around €100 million of the deferred tax last month, and PPAs amounting to €973 million were concluded after April 1st. This year, €284 million has been formally gathered so far.
Revenue has determined that out of the €300 million in unpaid taxes, €120 million is deemed “non-recoverable” while negotiations are ongoing for an additional €80 million. Efforts are being made for the recovery of approximately €100 million. Although deferral options exist for these taxes without added interest, businesses that have not liaised with Revenue on their settlement plans risk accruing up to 10 per cent interest on their tax arrears.
Currently, there are over 12,500 Payment Plan Arrangements (PPAs) in place, addressing debts that amount to €1.2 billion, according to Revenue. More than one-third of these PPAs are held by firms situated in Dublin, contributing to about half of the total outstanding amount.
These PPAs are mainly in place with businesses in sectors such as wholesale and retail, hospitality, construction, as well as those typically categorised under the professional and technical industries. Notably, these sectors have been severely impacted by the limitations on commerce posed by the pandemic.