Revenue Note for Guidance

The content shown on this page is a Note for Guidance produced by the Irish Revenue Commissioners. To view the section of legislation to which the Note for Guidance applies, click the link below:

Revenue Note for Guidance

991B Covid-19: Special warehousing and interest provisions

Summary

This section provides for “warehousing” or suspension of collection of PAYE (Employer) liabilities incurred while trading was restricted during the Covid-19 Pandemic (“Covid-19 liabilities”).

The provision applies to businesses who, as a consequence of Covid-19 related trading restrictions, are unable to pay their “Covid-19 liabilities” and who have filed all required returns.

All “small and medium enterprises” (SMEs) whose tax affairs are dealt with in Revenue’s Business Division or Personal Division qualify automatically. Other taxpayers will qualify if they can show their business has been adversely affected by Covid-19.

Details

(1) Subsection (1) defines various terms used in the section.

“the Acts” outlines the provisions an employer must comply with to qualify for debt warehousing;

“Covid-19” is as defined in section 2 of the Emergency Measures in the Public Interest (Covid-19) Act 2020;

“Covid-19 liabilities” means the PAYE (Employer) liabilities from the pandemic period which will be “warehoused”.

The three periods of the scheme, which are:

  • Period 1, the “Covid-19 restricted trading phase”, which runs from the date the business of the employer was adversely affected by Covid-19 (beginning no earlier than the February 2020 income tax month for PAYE (Employer) liabilities) until 31 December 2021,
  • Period 2, the “Zero Interest Phase”, which runs from 1 January 2022 until 31 December 2022, and
  • Period 3, the “Reduced Interest Phase”, which runs from 01 January 2023 until the employer has paid the liabilities, during which interest will be charged at c. 3% per annum on warehoused tax debt from Period 1.

(2) The business of an employer will be treated as “adversely affected” by Covid-19 on the date on which the Revenue Commissioners agreed to temporarily suspend the collection of Covid-19 liabilities because of the effect on the employer’s business of Covid-19 trading restrictions.

(3) Debt warehousing will only apply to employers who, because of Covid-19, are unable to pay their Covid-19 liabilities and who have filed all required PAYE (Employer) returns. All “small and medium enterprises” (SMEs) whose tax affairs are dealt with in Revenue’s Business Division or Personal Division will qualify automatically. Other employers must notify Revenue that they have formed the opinion that they are unable to pay their Covid-19 liabilities.

(4) Whether or not an employer is dealt with by Revenue’s Personal Division or Business Division will be determined by the most recent correspondence received by the employer from Revenue.

(5) An inspector or other officer nominated under section 990 TCA may carry out enquiries to satisfy herself/himself that an employer is unable to pay their Covid-19 liabilities.

(6) Section 991 is disapplied where the conditions of section 991B are complied with. Provided these conditions are met, interest under section 991 TCA (c. 10% per annum) will not apply to the late payment of Covid-19 liabilities.

(7) Where this section applies to an employer and the employer complies with the obligations imposed under the Acts on such an employer (for example, timely filing of returns and payment of other liabilities) then the normal interest rate (c. 10% per annum as of June 2020) for PAYE (Employer) liabilities as provided for in section 991(1) TCA will not apply during the Period 1 and Period 2.

(8) With effect from the first day of Period 3, interest a rate of 0.0082% per day or approximately 3% per annum - will apply on the amount of Covid-19 liabilities remaining unpaid where, in addition to being subject to this section and complying with the employer’s obligations under the Acts, the employer, prior to Period 3, enters into, and complies with, an agreement with the Collector General to pay the employer Covid-19 liabilities, together with any interest payable under this section.

(10) In the following circumstances the interest rates provided for in section 991 TCA will reapply to outstanding Covid-19 liabilities:

  • where an employer fails to comply with obligations under the Acts or fails to comply with the terms of an agreement entered into in respect of repayment of the Covid-19 liabilities. In these cases, interest under section 991 will apply on outstanding Covid-19 liabilities with effect from the date of the happening of the event which gave rise to non-compliance.
  • where an employer fails to enter into an agreement in respect of repayment of the Covid-19 liabilities. In this case, interest under section 991 will apply on outstanding Covid-19 liabilities with effect from day 1 of Period 3.

(12) Warehousing of Covid-19 liabilities will not prevent an employer obtaining tax clearance under either section 1094 or 1095 TCA provided the employer complies with the requirement to file returns under this Chapter.

(13) The Collector General will not issue demands in respect of Covid-19 liabilities provided the employer complies with the obligation to file returns required under this Chapter.

(14) Provision has been made for warehousing of Covid-19 liabilities where an employer files PAYE returns on a quarterly or annual basis. For such employers, their “Covid-19 liabilities” – that is, the tax debt which will be warehoused - will include liabilities of income tax months which are paid at the same time as income tax months within Period 1 in the normal definition. For example, if an employer pays its PAYE (Employer) liabilities quarterly and pays its January 2020 liability at the same time as its February and March 2020 liabilities, the liabilities for January 2020 will be warehoused.

Relevant Date: Finance Act 2021