Ireland’s Debt Warehousing Scheme (DWS)

Brief Introduction

During the Covid 19 pandemic, many businesses were significantly negatively impacted due to trading and cash flow difficulties. One of the key measures introduced to assist Irish enterprises was the Debt Warehousing Scheme (DWS). Under the terms of this Revenue scheme, businesses could defer eligible tax liabilities until their financial position had improved.

Taxes included in the warehousing scheme include VAT, PAYE (employer), limited cases of income taxes, temporary wage subsidy scheme (TWSS) and employment wage subsidy scheme (EWSS) overpayments.

In the initial phases 1 (2020) and 2 (2022), no interest was applied to the debt balance, however, interest at 3% would be charged on amounts due from the start of period 3 (2023) to the agreed repayment date. In October 2022, Revenue extended the date for repayment of warehoused debt from 1st January 2023 to 1st May 2024 as a result of businesses encountering slower than anticipated return to normal trading conditions post pandemic and also as a result of the cost of living/energy crisis that has swept to the fore in more recent times.

Recent Updates

On 5th February 2024, The Minister for Finance announced that the 3% interest rate applicable to period 3 would be reduced to 0% and that any interest already paid by businesses to date would be refunded.

Business availing of the DWS have until 1st May 2024 to engage with Revenue on a phased payment arrangement if they are unable to repay their warehoused debt in full by this date. Revenue have advised that they will provide ‘every possible flexibility’ in accommodating such cases by negotiation on the level of downpayment, the repayment terms and the availability of payment breaks during any agreed term.

Payment Options

There are a number of payment options available, and these include full or part payment via online payment channels, commence payments via a phased payment arrangement pre-agreed with Revenue (PPA), apply for a PPA consolidation if there is an existing agreement for other taxes or request to offset repayable claims eg: VAT against warehoused debt.

It must be noted that an important condition of the DWS is that all current returns and obligations remain compliant. Any instances of non-compliance can result in removal from the scheme and its associated favourable rates with any outstanding debt becoming payable immediately and subject to much higher interest rates of 8% or 10% per annum. It can also mean that tax clearance certificates may be automatically rescinded, and any government support payments or grant aid will cease until compliance issues are rectified.

If your business has warehoused debt, make sure to take the appropriate action before the deadline date to ensure the best possible outcome to suit your current circumstances. Let our team assist with effective management of your debt and liaise with Revenue on your behalf to help ensure compliance and to help navigate through these recent updates.

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