Warehousing of tax debt was put in place back in 2020 to assists businesses who experienced cash-flow and trading difficulties during the COVID-19 pandemic.
Under the scheme, taxpayers could defer paying some eligible tax liabilities until they were in a position financially to deal with the debt.
Revenue divided the scheme in three distinct period:
Period 1: January 2020 to December 2021 – All tax liabilities are warehoused.
Period 2: January 2022 to 31 December 2022- No interest applies to the warehoused debt.Period 3: January 2023- onwards . Interest of 3% of the total debt is applied until the final payment date. Additional to it taxpayers will have until 1st May 2024 to agree a Phased Payment Arrangement with Revenue for the warehoused debt.
PPA (Phased Payment Arrangement):
Customers are legally obliged to pay their full tax liability on time, however Revenue recognises that, in some cases, this could cause undue hardship and may be impossible for some Customers. To facilitate the Customer in making payment of the liability, Revenue has granted extra-statutory concession of paying the liability over a period of time, making it more manageable.
As the name would suggest, a PPA (Phased Payment Arrangement) allows tax payers to settle their debt in instalments over a period of time.
Duration
The maximum payment timeframe for a PPA is 60 months (5 years).
Requirements
Where a Phased Payment Arrangement is requested to the Revenue then the business will be required to provide sufficient information, to justify such an arrangement. The information required is determined by the size of the debt.
Debt – Greater than €100,000
Where the debt is greater than €100,000, the tax payers will need to provide:
1. On-line completion and submission of the Phased Payment Application (ePPA1)
Full details of Interest charges and repayment schedule will be outlined to you.
This point is of particular importance because not only does indicate the down payment amount, but you will need to outline how much time you require to pay your debt and the amount for the monthly payments.
2. Up to date bank statements
3. List of all, any assets and encumbrances thereon
4. Outline of what cost cutting measures have been implemented in the business
including drawings by the owner, directors.
5. Cash flow projections for the following 6 months
6. Up to date management accounts
Revenue will take into consideration that the data shows the viability of the business and, in relevant cases, the capacity to meet the terms of a payment plan together with ongoing compliance in relation to future tax liabilities.
7. Agent Consent Form : Customers must complete and submit an Agent Consent Form where they require their Agent to apply for and manage the PPA on their behalf.
Payments
The PPA payments are done by DD and it will cover both the initial down-payment and the monthly payment amounts.
All PPAs must include a minimum down-payment of 25% or 40% (where tax clearance is required) of the total liability outstanding.
The down-payment is deducted from the Customer’s bank account 3 working days after the application has been approved by the CG Caseworker. Once deducted, the PPA is considered to be ‘in progress’.
Tax affairs need to be kept up to date while the Phased Payment Arrangement is in place. Where an arrangement is cancelled due to unpaid current taxes, the customer must commence the application process again.
If you would like further information on how to apply for the Phased Payment Arrangement please Contact Us.