Debt Warehousing Scheme – Take Action Now

Deadline for PPA Application

The deadline for agreeing an instalment arrangement with Revenue under the debt warehousing scheme is fast approaching.

Over the course of the last month taxpayers will have received notices from Revenue advising them that they have until 1^st May to either pay warehousing debt in full or to enter into a Phased Payment Arrangement (PPA).

Compliance Changes in Debt Warehousing Scheme

Revenue says businesses will be provided with every possible flexibility in managing the payment of their warehoused debt. This includes the level of down-payment, if any, to commence the payment arrangement and an extended payment duration. It also includes payment breaks and payment deferral if temporary cash flow difficulties arise during the arrangement term.

Amendment to Interest Rate

The Minister of Finance announced in February that the rate of interest on warehoused debt of 3% effective from 1^st January 2023 (for most businesses) would be reduced to 0%.

Businesses who have already paid warehoused debt in full together with interest are entitled to a refund of this interest. Application for this refund can be done by contacting Revenue direct.

Businesses who entered into PPAs before the announcement of this change also need to contact Revenue to effect the reduction in the interest rate.

Strata View on Key Changes to Debt Warehousing Scheme

At Strata Financial, we welcomed the 0% interest rate and increased flexibility in the operation of the scheme. Partner Sinéad Keogh says “it will ease the burden on healthy operating companies.  It is encouraging that Revenue wants to support viable businesses to survive and thrive.”

Strata caution, however, about key deadlines which businesses need to observe. Any debt warehouse customer who has not applied for a PPA or otherwise engaged with Revenue by 1 May 2024 will lose their Debt Warehouse status. This means that all their outstanding debt will be subject to immediate collection. They will also face enforcement action and interest at the standard rate of 10% on VAT and PAYE or 8% on Income Tax will apply. Please click here for further information from Revenue on the scheme.

Despite the changes, businesses still need to file their current tax returns and pay liabilities as they fall due. By remaining in the debt warehouse scheme, businesses will benefit from the 0% interest rate and flexible payment options available.

“Across the many industries we work with, this change will benefit clients,” says Sinéad Keogh. “For example, it will mean a saving of over €35,000 over five years on a PPA on €200,000 debt. This will allow clients to get on with what they do best, the running of their business.”

How Strata Can Help with Warehouse Debt Issues

At Strata, we are actively engaging with clients who have warehoused debt that we know about, says Sinéad. “However, if you haven’t yet discussed your warehoused debt with us, please get in touch right away. We can assist businesses, whether they are existing clients or not, with the process of negotiating a PPA. We will engage with Revenue on your behalf and guide you towards a satisfactory agreement for resolving your debt.”

Call us today on 01-6311400 to start the process of securing a PPA that works for you and your business. You can email Sinéad directly:  sk@stratafinancial.ie