The Revenue Commissioners has issued a warning to businesses with €1.8 billion in warehoused debt from the Covid-19 pandemic, advising them to engage ahead of the May deadline for payment.

Businesses are encouraged to plan for repayment and, if necessary, establish a payment arrangement through the online PPA (phased payment arrangements) facility. Early engagement allows businesses to determine the best repayment solution, ensuring certainty in future cash flow commitments. Flexible payment arrangements are available with reduced down payments and monthly repayments, and adjustments can be made if circumstances change.

As of November, there was €1.79 billion in warehoused debt for 58,152 businesses, down from the peak of €3.1 billion. Two-thirds of businesses owe less than €5,000, while only 10% owe more than €50,000. Some businesses have already started repaying warehoused debt, totalling €90 million.

The tax warehousing scheme and a lenient approach to debt recovery contributed to subdued insolvency activity during the pandemic. Although there was a 50% increase in reported insolvencies in the first three-quarters of the year compared to 2022, it aligns with pre-pandemic levels in 2018 and 2019. Revenue is currently charging a 3% annual interest rate on warehoused taxes, lower than the typical 8-10% on overdue taxes.

It is crucial for businesses to heed the Revenue Commissioners’ warning and proactively engage in planning for the repayment of warehoused debt ahead of the May deadline. Establishing a payment arrangement through the online PPA facility can offer flexibility, allowing for reduced down payments and manageable monthly repayments starting this May.

Businesses facing financial challenges should consider the available options and take advantage of the flexibility provided by the phased payment arrangements. Overall, staying proactive and informed about the evolving situation will be crucial for businesses navigating the repayment process.