Is Your Irish Hospitality Business Ready for the Debt Warehousing Deadline?

As April 2024 rolls in, hospitality businesses in Ireland face the Debt Warehousing deadline. Revenue has been warning businesses that they have just a few weeks to finalise their payments.First, no need to panic. We know getting a letter from Revenue can be scary, but they’re not out to get you. It’s not in their interest to put anyone else out of business, so think this way: they want to work with you, not against you. And there is room for negotiation.If you run a restaurant, café, pub, or bar in Ireland, this post is for you. We're here to answer all your burning questions and make sure you're fully prepared before the May 1st deadline. Let’s get to it.

Debt Warehousing: What are the Recent Developments?

During the lockdown, Debt Warehousing emerged as a lifeline for the hospitality sector, allowing them to defer tax payments to stay afloat financially.Now, the dreaded date has arrived. It’s time to repay your debt, and it's getting tight — the final deadline is May 1st, 2024.Make no mistake: debt is debt, and it has to be paid, but the government doesn’t want any more businesses closing. To take some pressure off, some positive changes have emerged:

• Interest-free debt: The previous 3% interest rate is now 0%.
• Down payment flexibility: Where 20-40% was previously the norm, you can now breathe easier with the acceptable 0% down payment.
• Extended repayment terms: A more lenient 5-year standard repayment period has replaced the 2-3 year window, and there’s room for negotiation if needed.

How much do you owe?

The cornerstone of your action plan is understanding your current debt.Revenue has likely sent you the necessary details by post. Make sure you keep a record of your numbers. These letters break down the balance due by tax type (VAT or PAYE) and timeframe.If you didn’t receive this letter for any reason, don’t fret. The Revenue Online Service (ROS) is your go-to resource.Either you or your accountant can access this information on the online portal. Just go into “Charges and Payments” to see a list of all the balances outstanding. There you can check the total of what you owe.

How long do you have to repay it?

Repaying your debt doesn't have to be daunting. The leniency from Revenue for a phased payment arrangement now stretches up to 60 months or longer.The key takeaway? Revenue wants their dues without disrupting your business. They're open to dialogue, so discuss a repayment schedule that fits your financial situation.Remember: if you don’t ask, you don’t get it. Some businesses have been able to extend it beyond 5 years. Carefully examine your finances and create a plan that is right for your business. If needed, negotiate.

The Anatomy of a Phased Payment Arrangement

So, what exactly is a PPA? Simply put, a PPA is your formal agreement with Revenue, outlining the repayment of your debt.It involves splitting the tax liabilities into smaller, more manageable monthly payments over an agreed timeframe. The process factors in your business's financial capabilities. It’s all about ensuring repayments don't wreck your business’s financial health.To understand your monthly obligations, use the handy calculator on ROS. It’ll help you create a sustainable payment schedule.

Crafting Your PPA:

1. Log in to ROS: Navigate to the 'phased payment arrangement' area.
2. Input your figures: Specify your tax balance and desired number of monthly payments.
3. Evaluate your plan: The calculator will present a tailored schedule reflecting your monthly repayment amounts.

The Deadline: April 30, 2024

By the end of the month, Revenue expects that you have either repaid your debt in full or secured your phased payment arrangement. No exceptions.Now, we really recommend that you get it done fast. If you want to benefit from the 0% interest rate over 5 years, you need to get it sorted before the deadline.If you miss it, they will treat the amount owned as any other non-COVID debt, subject to immediate collection. We’re talking interest rates of 8/10%. You want to avoid this.

The Importance of Acting Promptly

As the deadline zooms in, things are going to get tougher. No question about it. To avoid last-minute hurdles, start your preparation now.With everyone rushing in at the last minute, Revenue's going to be inundated. So securing an early PPA ensures a smoother experience.Also, the faster you get it done, the faster you’ll get this huge weight off your shoulders. You’ll remove the anxiety-inducing uncertainty about your cash flow, and it’s just going to be a huge relief.Again, do not wait until the last minute!

Applying for Your PPA

Time to solidify your plan:

• Ensure all tax returns are submitted: Before you can finalise your PPA, all returns must be current.
• Commit to paying ongoing taxes: It's crucial to maintain regular tax payments separate from your warehoused debt.
• Compile six-month bank statements: These will support your application and offer Revenue a snapshot of your financial health.

For Debts Exceeding €50,000

The process becomes more detailed:

• Fill in an EPPA1 form: This form delves deeper, requiring comprehensive financial information.
• Offer detailed financial projections: Revenue looks for transparency and a clear vision of your viability.

All applications are viewed and responded to in around 10 days. Revenue may ask for more info, and if they do, it’ll be through ROS exclusively.You need to stay on top of it. If you don’t answer them within the specified time frame, there's a high likelihood that they will cancel your application. That’s something you absolutely don’t want.

Your PPA is not set in stone

There’s room for flexibility. Word is, Revenue's open to adjusting terms to match your evolving business needs. So, if things change down the line, you're not stuck.Remember always to put your business first. If you need more time, ask for it.For more detailed information about DW scheme and PPAs, we recommend that you check Revenue’s information booklet.

Recap & Takeaways

• Deadline: Remember, we’re advising business owners that 30 April 2024 (and not May 1st) is the cutoff for having a PPA in place or fully repaying your debt. You need to act fast.
• Use ROS: Take advantage of the PPA calculator to establish what your repayments could look like.
• Consider your cash flow: Agree to a PPA that you're confident you can maintain. Do not agree to something you cannot stick to
• Start now: If you haven’t already, don't delay your application. Initiating the process now avoids the last-minute chaos and complications on 1 May 2024.

Free Masterclass: Preparing Your 2024 Debt Warehousing Action Plan

Need a hand?

At Outmin, we're all about making accounting easy for the hospitality sector.

We’re experts in streamlining operations and love solving problems. If anything is unclear or feels overwhelming, reach out. We've got your back!

For an expert run down of everything that's coming, watch our free masterclass Preparing Your 2024 Debt Warehousing Action Plan.

Together, we'll team up to make your Debt Warehousing Action Plan a secret ingredient for success, not stress. Tackle Debt Warehousing with confidence and a solid strategy, and watch your business thrive.

Now, let’s get started on that action plan!