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Latest update on the Warehoused Debt Scheme

Revenue Chairman Niall Cody has said (25 January 2024) – Revenue’s approach to the payment of warehoused debt from 1 May 2024 will be flexible and tailored to each business based on its capacity to pay. Revenue will work with businesses so that they can continue to meet current liabilities as they arise, secure the viability of their business and minimise their interest costs. The Chairman emphasised the vital importance for a business to keep up to date with their current taxes to maintain the benefits of the DWS and to demonstrate that they remain a viable business.

What Repayment Periods are available?

The online Phased Payment Arrangement (PPA) available through the Revenue Online Service (ROS). It offers terms up to 5 years (60 months), with an initial low down payment needed to activate the PPA. When requesting a PPA term extending beyond 5 years, it's crucial to assess the necessity for such an extended duration. This evaluation involves providing substantial proof of the business's capacity to maintain and support the PPA throughout its term. This can be evidenced by robust cash flows or income streams. Without this evidence, the sustainability of the PPA is at risk, potentially leading to failure and adverse consequences for the business. In cases where such proof is insufficient, the approval of a longer PPA duration may be denied.

Downpayments - how much?

Before the pandemic, the initial payment (downpayment) for activating a Phased Payment Arrangement (PPA) was typically 25% of the total amount, or 40% if tax clearance was needed. However, there's now more flexibility in this process. The exact percentage of the downpayment required depends on specific circumstances and the details of the payment plan proposed. The online system allows for a very low initial downpayment, sometimes as little as 0.1%, to start the PPA. It's important to remember that a smaller downpayment generally leads to higher monthly payments and a longer repayment period. If documentation shows that a business can afford a higher downpayment, this can be negotiated and potentially lead to more favorable terms in the PPA agreement.

Implement Internal Controls

What happens if our financial circumstances worsens?

Once a Power Purchase Agreement (PPA) is operational, if you encounter difficulties in making payments, there are several options you can consider. These include deferring payments for a period, taking a break from payments, or changing the dates when payments are due. It's also crucial to keep up with your tax obligations throughout the duration of the PPA. Failing to do so can lead to serious consequences. Your PPA may be terminated, and any debt under the PPA could become due immediately, with full interest rates applied. Additionally, you could lose your tax clearance status if you have outstanding debts.

Can I get a write down?

Reducing the amount owed (a write down) on warehoused debt is considered unfair to businesses that have already paid back all or part of their debt under this scheme. This also includes businesses that have set up payment plans to clear their debt. Additionally, many businesses that were eligible for this debt deferral program chose not to use it, or only used it briefly to manage tough business conditions before paying off their debt.

Please Note:    Revenue recommend early engagement to get your agreement in place and you need to keep up to date with current taxes.

How Solve Outsource can help?

We have friendly and expert staff who can help companies understand and meet the challenges ahead.

Author..

John Carolan ACMA, CEO of Solve Outsource

Contact Email: john@solve.ie