Revenue Note for Guidance
Section 114B provides that the Revenue Commissioners may treat the business of certain accountable persons as being adversely affected by Covid-19 and from an agreed date may agree to temporarily suspend the VAT liabilities and interest as a consequence of the effects on the person’s business of Covid-19.
The scheme allows for the deferral of unpaid VAT and PAYE (Employers) debts arising from the COVID-19 crisis for a period of 12 months after a business resumes trading (in accordance with the Reopening Roadmap) and the application of a lower interest rate of 3% per annum on the repayment of such warehoused tax debts after that date.
As part of the July 2020 Jobs Stimulus Package, the Government announced the application of a lower interest rate of approximately 3% per annum for non–COVID-19 related tax debt. Applications to avail of this arrangement were required to be submitted to the Collector-General on or by 31 October 2020.
Additional details of the scheme which applies to various taxes including VAT are available.
(1) Subsection (1) sets out various definitions of terms used in the section.
The Acts are defined as meaning the Financial Provisions (Covid-19) (No. 2) Act 2020, Parts 18C and 18D of the Taxes Consolidation Act 1997, the Stamp Duty Act 1999, the Capital Acquisitions Act 2003, the Finance (Local Property Tax) Act 2012, the Customs Act 2015, the Capital Gains Tax Acts, the Tax Acts within the meaning of section 1 of the Taxes Consolidation Act 1997, the statutes relating to the duties of excise and the management of those duties and any instruments made under those enactments.
Covid-19 has the same meaning as it has in the Emergency Measures in the Public Interest (Covid-19) Act 2020.
Covid-19 liabilities means value-added tax due and payable by an accountable person under this Act and regulations made under this Act, in respect of Period 1.
Period 1 means the period (a) beginning on the later of (i) the first day of the taxable period immediately preceding the taxable period in which the accountable person’s business was first adversely affected by Covid-19 and (ii) 1 January 2020 and (b) ending on the last day of the taxable period next following the recommencement date falls.
This period is, the “COVID-19 restricted trading phase”, and it covers the period when the business first experienced cash flow trading difficulties arising from the impact of COVID-19. This is 1 January 2020 for VAT (that is, beginning with the January/February 2020 bi-monthly VAT period).
Period 1 ends on the last day of the first full bi-monthly VAT taxable period which commences after the business has resumed trading.
Period 2 means the period (a) beginning on the day next following the last day of Period 1 and (b) ending on the day the earlier of (i) the day that is 12 months from the day first-mentioned in (a) and 31 December 2022 or where the Minister makes an order the day then it is the earlier of (i) the day specified in the order and 31 December 2022.
This period is, the “zero per cent interest phase”, and it is the period of 12 months beginning on the first day after the end of Period 1. No interest is charged during Period 2 on the warehoused liabilities from Period 1.
Period 3 means the period (a) beginning on the day next following the last day of Period 2 and (b) ending on the day on which the accountable person has discharged the Covid-19 liabilities being VAT in full.
This period is the “reduced interest rate of 3% per annum phase”, and it begins on the first day after the end of Period 2 and continues until the date on which the COVID-19 deferred liabilities are discharged in full. This is the phase where a reduced interest rate of 3% per annum applies until the warehoused debt has been fully discharged.
Recommencement date in relation to an accountable person means the later of –
(2) Subsection (2) provides that the business of an accountable person shall be treated as adversely affected by Covid-19 from the date the Revenue Commissioners agreed to temporarily suspend the collection of the VAT liabilities of the accountable person as a consequence of the effect on the accountable person’s business of Covid-19.
(3) Subsection (3) applies to an accountable person who –
(4) Subsection (4) provides that in order to satisfy the condition of paragraph 3(c) a person’s tax affairs shall be deemed to be treated as dealt with by the Personal Division where the most recent correspondence received by the accountable person was from that Office.
(5) Subsection (5) provides that an inspector of taxes or other officer nominated by Revenue for the purpose of section 111 of the VATCA 2010 (assessments of tax due) may make enquiries as to satisfy themselves as to whether an accountable person is unable to pay all or part of that person’s Covid-19 liabilities.
(6) Subsection (6) provides that where section 114B applies to an accountable person then section 114 which covers the charging of interest does not apply to that person.
(7) Subsection (7) provides that where section 114B applies to an accountable person and that person has complied with all obligations under the Acts, then no interest shall be due on that accountable person’s Covid-19 liabilities during Period 1 and Period 2.
(8) Subsection (8) provides that –
then in such circumstances simple interest shall be paid by the accountable person to the Revenue Commissioners from the first day of Period 3 on any amount of Covid-19 VAT liabilities remaining unpaid and such interest shall be calculated from that day until payment of the amount for any day or part of a day during which that amount remains unpaid, at a rate of 0.0082 per cent, which approximates to about 3% per annum.
(9) […]
(10) Subsection (10) provides that where, during period 1 or period 2, an accountable person fails to comply with their obligations under the Acts or fails to comply with the obligations under the agreement with Collector-General, simple interest shall be paid by the accountable person to the Revenue Commissioners on any amount of the Covid-19 liabilities remaining unpaid on the date on which the event resulting in failure to comply with the obligation concerned occurred. In such cases, interest shall be calculated from that day until payment of the amount for any day or part of a day during which that amount remains unpaid, at a rate of 0.0274 per cent
This Subsection also provides that where the accountable person has, on the first day of Period 3, has not entered into an agreement with the Collector-General to pay their Covid-19 liabilities, together with interest under this subsection, simple interest shall be paid by the accountable person to the Revenue Commissioners on any amount of the Covid-19 liabilities remaining unpaid on the first day of Period 3. In such cases, interest shall be calculated from that day until payment of the amount for any day or part of a day during which that amount remains unpaid, at a rate of 0.0274 per cent.
(11) […]
(12) Subsection (12) provides that where an accountable person –
the tax due and payable by the accountable person for that accounting period under the Financial Provisions (Covid-19)(No. 2) Act 2020 shall be treated as Covid-19 liabilities.
(13) Subsection (13) provides that –
Relevant Date: Finance Act 2020