New legislation will permit Revenue to ‘warehouse’ VAT and payroll tax debt that arose on foot of the COVID-19 related restrictions.

Revenue has said that it will continue to work with businesses severely impacted by COVID-19 to agree payment arrangements that support both the capacity of the business to resume trading as well as the national recovery, post COVID-19.

Tax debts

Revenue has confirmed the following:

• COVID-19 related VAT and payroll tax debts, due from 1 March, to the date when sectoral restrictions are lifted, will be parked for a period of 12 months,
• no interest will accrue on the tax debts during the 12 month period,
• thereafter, the COVID-19 related tax debts will carry a reduced interest rate of 3% (down from 10%), until the debt is paid,
• the timeframe allowed to pay the ‘warehoused’ debt will be flexible and determined by the ability of the business to pay both COVID-19 related debts as well meeting its ongoing tax liabilities as they arise in the normal course,
• for the warehousing arrangement to apply, all returns must be filed in accordance with the Revenue guidance that has applied since the start of the current pandemic.

Additional information and clarifications will be provided in due course.   

Revenue has also advised businesses to continue to send in tax returns on time, even where payment is not immediately possible.

Late payment charges suspended

It is suspending all debt enforcement action until further notice, and suspending interest on late payment charges for both SMEs (automatically) and larger businesses (on request).

These measures have provided liquidity support for some 14,000 VAT-registered businesses and over 30,000 employers.

The value of the measures was approximately €800 million for January/February VAT and February payroll taxes.