Budget 2023 - Debt Warehousing Scheme & SCARP


Since its introduction, the total debt eligible for Revenue’s Debt Warehousing Scheme was €31.947 billion. As of 30 June 2022, 91% of the warehoused tax debt had been repaid. As at 31 July 2022, some 84,000 businesses had outstanding warehoused debt of €2.8 billion, down from 105,000 businesses warehousing €3.2 billion as at 31 January 2022.

The Government has confirmed that Revenue has already written off some €26.4 million from companies which have been liquidated since the introduction of the scheme in May 2020. Looking forward, the Department of Finance assumes that 25% of the remaining warehoused debt will not be repaid and this provision is said to be a conservative one.

Debt Warehousing Scheme

Revenue’s Debt Warehousing Scheme has proven to be an invaluable liquidity support for businesses impacted by trading interruption due to the Covid-19 pandemic. The scheme initially provided for three distinct periods:

  • Period 1, the “Covid restricted trading period”, spanned 1 May 2020 to 31 December 2021 during which VAT and employer’s PRSI was parked at a rate of 0% interest; and
  • Period 2, the “zero interest period”, spanned 1 January 2022 to 31 December 2022, also at 0%; and
  • Period 3, the “reduced interest period”, commenced 1 January 2023 and attracts interest at a rate of 0%.

The scheme has evolved to reflect the changing and challenging landscape for businesses:

  • Budget 2021 saw the scheme extended to include warehousing of Income Tax for proprietary directors;
  • In June 2021, overpayments of the Temporary Wage Subsidy Scheme were included for warehousing;
  • In Budget 2022, warehousing was extended to overpayments of the Employee Wage Subsidy Scheme;
  • Following the re-introduction of restrictions, which impacted trading in late 2021/early 2022, period 1 was extended to 30 April 2023 for some businesses, with period 2 and 3 cascading thereafter. 

Q4 2022 – Crunch Time

As it stands, Revenue have invited taxpayers who are not in a position to discharge warehoused debts in full by 31 December 2022 (or the extended deadline of 30 April 2022) to submit a phased payment proposal before 31 October 2022, in order to avail of the reduced interest of 3% during period 3. The typical interest rate runs from 8% to 10%. Some phased payment arrangements will provide for an initial lump sum payment of 25% to 40%.

As such, it is crunch time for many businesses to take a decision in respect of the repayment of debt. When one considers the impact of the energy crisis and the effect that it is having on input costs, it is clear that many businesses are unprepared for the prospect of dealing with their warehoused debt.

Insolvency or SCARP

It has been widely accepted that corporate insolvencies are at artificially low levels due to government supports in recent years. Whilst the first six months of 2022 saw insolvency numbers increase by 50% from the same period in 2021, the 253 insolvencies recorded represent a decrease of 18% on the 310 recorded for the first six months of 2019, before the impact of the Covid-19 pandemic and related government supports for businesses.

With the end of period 2 looming, insolvency practitioners are reporting increased enquiries about a new rescue mechanism for insolvent but viable companies. The Small Companies Administrative Rescue Process (abbreviated to SCARP) was devised to restructure small and micro companies (making up 98% of Irish corporate entities) by way of new investment and cross creditor cram down of debts. The process is administered outside of the Court system, assuming no creditor objections, and as such, is pitched as a cost effective alternative to Examinership.

Rescue plans will be approved by 60% of creditors of any class, present and voting, and subject to no objections from creditors within 21 days of the creditors’ meeting for the approval of the plan. 

Commenced on 8 December 2021, the take-up of SCARP has been slow. As at 15 September 2022, a search of the Companies Registration Office shows that only ten appointments of Process Advisors initiating SCARP processes have occurred.

An apparent pitfall of SCARP is the ability of Revenue to “opt out” of the process in their capacity as an excludable creditor. Assuming warehoused debt is substantial, the decision of Revenue to “opt out” may be fatal to a rescue plan under SCARP. That said, Revenue have engaged in the formulation of SCARP legislation and have committed to providing a reason if they exercise their right to “opt out”.

Revenue have recently published eBrief No. 170/2022 - Procedures for Small Companies Administrative Rescue Process which sets out Revenue’s considerations when deciding whether to “opt in”. These include, inter alia, (i) the quantum of the liability, (ii) the number of referrals to enforcement, (iii) timeliness of filing returns, (iv) other directorships of the directors and the compliance status of those companies, (v) the company’s historic interaction with Revenue’s debt management division.

Data is not currently available on the extent of participation in the ten rescue plans initiated, some of which are ongoing. However, it is clear that Revenue will consider each application on a case-by-case basis and on merit.


Pitched by the Government as a cost of living budget, it is hoped that Budget 2023 will implement measures to curb pressure experienced by businesses in respect of soaring input costs. This will be essential to afford businesses the ability to put meaningful phased payment proposals to Revenue in respect of warehoused debt, backed by reliable forecasting.

The Government has big decisions to make in Budget 2023. Over the weekend it was reported that the Government has proposed a new State Aid scheme that will allow businesses apply for grants to offset the costs of electricity. A question then arises as to whether Government should extend the debt warehousing period in light of the current crisis. Allied to this, Revenue had recently begun to issue final notices to businesses in respect of unpaid tax liabilities, which are precursors to enforcement, whether by the Sherriff or the appointment of Official Liquidators, which were measures temporarily paused at the start of the pandemic. There is a fine line to be achieved between Revenue recovering monies owed for the benefit of the Exchequer without pushing companies into insolvency. Not all businesses will survive and Government needs to be careful to ensure that it is not applying state resources keeping businesses on life support that ultimately need to be restructured.

Contact Us:

To discuss how your business can avail of recent SCARP measures introduced or to discuss insolvency options, contact Louise Guinan, Restructuring & Insolvency Senior Manager on (01) 6440100.

RBK Budget Briefing

RBK will be holding its annual Breakfast Budget Briefing as a hybrid event in person at the Sheraton Athlone Hotel and streaming live online on 28 September. Patrick Fannon, Tax Director, RBK will be analysing the tax measures announced in Budget 2023 and Oliver Mangan, Chief Economist AIB will look at the economic outlook. In the lead up to the Budget over the next number of weeks RBK’s Business and Tax advisors will look at potential tax measures that the Government could consider and areas of concerns that are facing our clients.