Update on expansion of the tax debt warehousing scheme

Revenue has provided the Institute with clarifications on a number of points related to the expanded debt warehousing scheme following the update provided by the Collector General’s Division to Chartered Accountants Ireland on how certain directors and employees with a “material interest” in their employer company will be allowed warehouse income tax liabilities relating to their Schedule E income from that company.

Revenue confirmed that where the Schedule E liability has been warehoused as a result of section 997A TCA 1997, interest will not arise on the 2020 preliminary tax underpaid as a result of the Schedule E liability. In circumstances where the Schedule E (PAYE) liability will be warehoused, the taxpayer will avail of the warehousing interest rates. This is subject to the taxpayer continuing to satisfy the debt warehousing scheme requirements e.g., filing tax returns by the due date as they arise. See here for information on the debt warehousing scheme.

Revenue confirmed that for preliminary tax 2021, the director may warehouse their Schedule E (PAYE) liability, the portion of which has been warehoused by the employer company, subject to meeting the conditions previously outlined i.e.

1. where a director / employee has a “material interest” in the company that pays their emoluments, and
2. section 997A TCA means the director / employee is not entitled to a credit for the tax deducted due to the company warehousing its PAYE (Employer) liabilities, and
3. the director/employee does not satisfy the 25% reduction of income threshold to avail of income tax debt warehousing.

Revenue also confirmed that directors who warehouse their Schedule E liability under the terms of the expanded warehousing scheme can avail of the extended filing date of 17 November 2021, where the return is filed via ROS and the non-Schedule E liability payment is made via ROS on or before 17 November 2021

For those who have already filed their 2020 Form 11, and wish to avail of the expanded warehousing scheme, Revenue advises that:

Where a director has already filed their 2020 income tax return prior to the Budget Day announcement and the director satisfies the requirements as outlined to avail of debt warehousing for only their Schedule E (PAYE) liability which has been warehoused by the employer company, they may submit a request via MyEnquiries outlining that they wish to warehouse their Schedule E (PAYE) liability.

The taxpayer should submit a request via MyEnquiries using the following pathway when submitting the notification:

MyEnquiries – Select “Collector General’s” and More Specifically “General Query”

The notification should outline the specific circumstances of the case and confirm that the taxpayer satisfies the conditions to avail of debt warehousing for their Schedule E (PAYE) liability which has been warehoused by the employer company.

The notification must outline the amount of Schedule E (PAYE) liability which the taxpayer wishes to warehouse and must include confirmation that the non-Schedule E liability has been paid.

The taxpayer must include the following declaration in the notification:

“Although my income has not reduced by 25% when compared to 2019, I wish to warehouse my Schedule E (PAYE) liability in respect of the tax deducted from director emoluments as set out in my Income Tax return on the basis that I am restricted by Section 997A TCA 1997 from claiming credit for tax deducted from those emoluments as a result of my employer company warehousing their PAYE (Employer) liabilities.”