Debt Warehousing Scheme

Posted in Good Advice, PAYE/PRSI, Taxation

The Debt Warehousing Scheme (DWS) is aimed at assisting businesses experiencing cash-flow and trading difficulties due to Covid-19 so a business can defer paying some of its eligible tax liabilities until it is in a better position financially.

The Economic Recovery Plan 2021 in June 2021 extended until the end of December 2021 the period of time during which tax debts could be warehoused under DWS and it also covered overpayments of the Employment Wage Subsidy Scheme (EWSS).

The Finance (Covid-19 and Miscellaneous Provisions) Act 2021 in July 2021 provided for warehousing of EWSS overpayments, refunds of TWSS payments, PAYE, income tax, VAT and PRSI as follows:

Period 1 (the “Covid-19 restricted trading phase”) from 1 July 2020 until 31 December 2021

Period 2 (“the zero interest phase”) from 1 January 2022 until 31 December 2022 during which no interest will be charged on warehoused relevant tax from Period 1 and

Period 3 (the reduced interest phase) from 1 January 2023 until the relevant tax is repaid to Revenue. During this period interest will be charged at 3% per annum on warehoused relevant tax from Period 1.

The DWS in January 2022 was extended as follows:

Period 1 to 30 April 2022

Period 2 (the zero-interest phase) 1 May 2022 until 30 April 2023

Period 3 (the reduced interest phase) from 1 May 2023.

The extension to the DWS will not apply to businesses that are not currently in receipt of one of the relevant COVID-19 Support Schemes.

It should be noted that if a company was availing of debt warehousing for PAYE employer liabilities, any directors or employees who have a “material interest” in the company cannot claim credit for taxes deducted if same have been warehoused and not paid over to Revenue by the company/employer.

A businesses whose taxes are warehoused can obtain a tax clearance certificate if it meets its other tax obligations.

Leave a Reply