• Paula Travers

Tax Debt Warehousing Scheme - What Every Business Owner Needs to Know

Are you a business owner worrying about how you are going to pay your VAT & PAYE liabilities?

Well, thankfully the Government has responded to your obvious concerns and have announced a new scheme which will warehouse these debts for a period of 12 months.

Here's what you need to know:

The tax debts covered are VAT & PAYE (Employer) debts from the 'COVID19 restricted trading' period. VAT liabilities for the periods January/February, March/April AND May/June 2020 are covered under this scheme. PAYE (Employer) liabilities for the months February, March, April, May and June 2020 are covered under this scheme. You must continue to file returns for these periods, but NO interest will be charged on late payment, and no debt enforcement will take place. The period covered will also include the 2 months after the business recommences 'normal' trading. VAT & PAYE (Employer) liabilities incurred while the business was unable to trade or subject to restricted trading, and during the 2 months after, will be 'ring-fenced'. This ring-fenced tax debt will be 'warehoused' for 12 months. No interest will be charged during this 12 month period. BUT BUSINESSES MUST PAY CURRENT TAX LIABILITIES ARISING DURING THOSE 12 MONTHS. After the end of the 12 month 'warehousing' phase, a reduced interest rate of 3% per annum (compared to normal 10% rate) will apply to the warehoused tax debt. Tax Clearance will be unaffected by these warehoused debts. Refunds & repayments of tax arising after businesses recommence 'normal' trading will be paid, BUT it will be possible to offset these against the 'warehoused' debt.

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