Tax Warehousing was introduced to assist SME's in the management of their cashflow. This guide answers the top ten questions with regards to the Tax Warehousing Scheme.
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1. What is “Tax Warehousing”
Tax Warehousing is the ringfencing and non-payment of a tax liability that a business is due to pay over to The Revenue Commissioners.
2. Can any debt be ring fenced?
Under the scheme, VAT and PAYE (Employer) tax debts deferred while a business is unable to trade or was subject to restricted trading due to the COVID-19 related health restrictions, as well as debts for an additional two months after the business resumes "normal" trading, will be ringfenced by Revenue.
3. What is the benefit of to my business?
The scheme is designed to assist business with cashflow. These debts can be deferred for 12 months without interest penalties but will eventually require repayment.
4. Can any business avail of tax warehousing?
These measures should apply automatically for SME’s. An SME is a business with a turnover of less than €3 million, which is not dealt with by either Revenue’s Large Corporate Division or Medium Enterprises Division
5. How long can I defer my debt?
Following resumption of “normal” trade, a debt may be ringfenced for up to 12 months with no interest being applied.
After 12 months, a 3% interest charge will apply to this debt (Revenue normally charge interest at 10%) until fully repaid.
6. Do I still need to file returns?
Yes, during the restricted trading period returns are still must be filed with the Revenue Commissioners. If a best estimate is used, this will need to be corrected.
7. Can liabilities outside the “restricted trading” period be warehoused?
No, once trading recommences all current liabilities should be filed and paid as per usual.
8. Will my tax clearance certificate be affected?
No, tax clearance certificates are not impacted.
9. My business normally receives VAT refunds. Will this be impacted?
Refunds and repayments of tax which arise will also be paid, notwithstanding that the business owes VAT and PAYE (Employer) liabilities that have been warehoused. However, a business can choose to offset the repayment against the warehoused liabilities if it wishes.
10. I have more questions, who can I ask?
You should direct any questions you have to your accountant. Feel free to contact us on firstname.lastname@example.org if you would like to discuss Tax Warehousing further.