Facing revenue debt can feel overwhelming, especially if you’re unsure of your options. For individuals and sole traders in Ireland, unresolved tax debt can lead to serious consequences, but help is available. This article explains what revenue debt is and how solutions like personal insolvency can offer a way forward.
What is revenue debt?
Revenue debt refers to unpaid taxes owed to the Irish Revenue Commissioners. This can arise from:
- Unpaid Income Tax
- Unpaid VAT (Value Added Tax)
- Unpaid PAYE (Pay As You Earn) taxes
- Capital Gains Tax (CGT) and Capital Acquisitions Tax (CAT)
- Local Property Tax (LPT)
- Unpaid Deferred Tax under the COVID-19 Debt Warehousing Scheme
Common causes of outstanding Revenue Debt
- Late filing or non-payment of tax returns
- Under declaration on income or turnover
- Errors in calculating or reporting tax obligations
- Cash flow difficulties leading to inability to pay
What Can Happen If You Don’t Pay?
Repayment demands for revenue debt can cause significant financial strain for anyone. The Revenue Commissioners use a variety of enforcement methods to try and recover outstanding taxes, including:
- Demand letters
- Interest and Penalties
- Deductions from wages or bank accounts
- Freezing or closing Bank Accounts
- Sheriff enforcement / Asset Seizure
- Legal proceedings such as Court judgments or Attachment orders
Why It’s Crucial to Act Early
These actions can escalate very quickly. It is important to engage early or seek advice from a professional such as an Accountant or Personal Insolvency Practitioner (PIP) and find out your options for addressing the situation.
Revenue Debt Solutions in Ireland
Here at McCambridge Duffy we can provide advice on your options. We have 4 full-time PIPs in house with a combined wealth of expertise in dealing with all sorts of revenue debt situations.
We offer two main Insolvency solutions that could help you in addressing unaffordable debts and revenue debt.
- Debt Settlement Arrangement (DSA):
A solution that addresses unsecured debts, such as revenue debt, credit cards, loans, overdrafts etc… In a DSA, affordable repayments are negotiated with creditors. Any remaining unsecured debt is written off on completion. - Personal Insolvency Arrangement (PIA)
Suitable for dealing with secured debts such as a property or assets, as well as unsecured debts. The debts are restructured to make way for affordable repayments. There are several different ways in which the debts can be addressed. Like a DSA, any remaining unsecured debts are written off on completion.
Applying for an insolvency solution can pause any enforcement action, by means of a Protective Certificate (PC), giving you the time needed to put your solution in place. If you are a Sole Trader, an Insolvency solution could also help facilitate you in continuing your business operations.
Treatment of Revenue Debt in Insolvency
The way revenue debt is handled in an insolvency solution depends on how the debt is classified:
- Preferential Debt:
This is debt that must be paid in full. This includes recent tax liabilities and certain high-income periods.
Unsecured Debt:
These are debts such as loans or credit cards that may be reduced or partially written off under a DSA or PIA. - LPT:
Can be included in an insolvency arrangement and repaid over time.
We assess each case individually and negotiate with Revenue and other creditors to reach a fair and manageable outcome.
Frequently Asked Questions
Q: Can Revenue debt be written off?
A: Some unsecured tax debts may be reduced, but preferential debts must be repaid in full.
Q: Will this affect my credit rating?
A: Yes, but when you are at the point of considering an Insolvency solution, it is already quite possible that your credit rating is already impacted. Insolvency can actually help you rebuild your financial profile over time. You are being proactive and taking steps to address your debts.
Q: What is a Protective Certificate?
A: It’s a legal document that stops creditors from taking any enforcement action, while a debt solution is being arranged.
Q: How do I start the process?
A: Start by contacting our advice team at McCambridge Duffy. We will assess your information and explain all options available. A qualified PIP is always available to assist with any complex queries and our initial consultation is completely free.
Your Path to Financial Recovery
Revenue debt doesn’t have to mean financial ruin. With the right support and a structured insolvency solution from McCambridge Duffy, you can protect your assets, reduce your stress, and work toward a stable financial future.
If you need help with unpaid tax or any other debts, contact McCambridge Duffy for a confidential consultation. Every financial challenge has a solution; let us help you find yours.
