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Home / News / Revenue recoups €1bn in warehoused debt, PAC hears

Revenue recoups €1bn in warehoused debt, PAC hears

Revenue has secured repayments of almost €1 billion in warehoused debt in the past two years, the Public Accounts Committee (PAC) has heard.

The Debt Warehousing Scheme was introduced in May 2020 to support to businesses struggling at the height of the Covid-19 pandemic.

The balance in the warehouse peaked in January 2022 at €3.2 billion, Revenue Chairman Niall Cody said.

At the end of 2023, the debt stood at €1.76 billion and was held by 58,000 taxpayers.

“The bulk of [the total] reduction was in payments,” Mr Cody said, with a “significant” amount of it having been prompted by a 3% interest rate kicking in.

“Close to a billion was in actual payments,” he added.

Almost 40,000 or 70% of those still availing of the scheme have debt of €1,000 or less.

“People are engaging”, Mr Cody told the committee, adding that it is “the cheapest finance available” .

“The key message that I want to get out today is that businesses need to keep their current tax up to date and paid,” he said.

As long as they do that, Revenue “will make appropriate tailored arrangements for the businesses to clear the warehouse” over time.

The deadline for making arrangements to address warehoused debt is 1 May.

All debt will then be subject to a 3% interest rate, “a significant reduction from the standard interest rates of 8% and 10% per annum that normally apply to late payments of tax”.

Mr Cody also revealed that Revenue collected €127 billion last year.

Some of that total amount is returned in repayments, meaning that the net Exchequer receipts – announced by the Department of Finance in recent weeks – are substantially lower.

“Preliminary net Exchequer receipts collected were €87.2 billion, some €4.8 billion – or almost 6% – more than in 2022,” he said.

Numbers paying Local Property Tax fell last year

Mr Cody also told the committee that the proportion of home owners paying the Local Property Tax (LPT) fell last year.

“The payment compliance rates for LPT for 2022 and 2023 are 97% and 95% respectively,” he told the committee.

He said that a “new structure for LPT came into effect from 2022”, and said that “the majority of property owners make reasonable and honest efforts to value their properties”.

Scrutinising the fall in compliance, Fianna Fáil’s Cormac Devlin noted that the change meant that around 100,000 people previously exempt are now eligible for the tax.

Revenue suspended enforcement and compliance activity resulting from Covid-19 which affected the 2022 receipts, Mr Cody replied.

This meant that Revenue did not issue reminders in February 2022, which meant that those homeowners who wait for those reminders before filing did not pay.

He agreed with Deputy Devlin that Revenue is not in the territory of a dangerous lack of compliance with the LPT.

“LPT is very stable,” he said, with the average payment being around €400-500.

So far this year, there has been an 80% rate of compliance, he revealed, adding: “There’s always a lag”.

“About 80% is consistent with the same figures this time last year,” he noted.

Mr Cody noted that there are around 30,000 deferred cases each year. “Probably the biggest proportion are pensioners,” he added.

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