Revenue is permitted to 'warehouse' VAT and payroll tax debt that has arisen as a result of the COVID-19 restrictions. While the legislation is yet to be enacted, the following are the key points:
COVID-19 related VAT and payroll tax debts, due from 1 March 2020 to the date when sectoral restrictions are lifted, will be parked for a period of 12 months.
Relevant tax periods currently include:
VAT: January/February, March/April and May/June;
Employer PAYE/PRSI liabilities: February, March, April, May and June.
SMEs (turnover of less than €3m) should qualify automatically; larger businesses (over €3m turnover) will be assessed on a case-by-case basis by Revenue.
No interest will accrue on the tax debts during the 12 month period; a reduced interest rate of 3% (down from 10%) will then apply until the debt is paid.
The timeframe allowed to pay the ‘warehoused’ debt will be flexible and will take account of current taxes due.
For the warehousing arrangement to apply, all returns must be filed in accordance with the Revenue guidance that has applied since the start of the current pandemic.