'A lot of small businesses will close': Cork business leader fearful of 'carnage' over coming months 

THE president of Cork’s Business Association, Kevin Herlihy, has said he fears “there’s going to be a lot of carnage between now and April” and that “a lot of small businesses are going to close”.

Mr Herlihy was speaking following the announcement yesterday that the interest rate applicable to warehoused debt will be reduced to 0%, representing a “drop in the ocean” for businesses, he said.

Speaking to The Echo, Mr Herlihy said the announcement was“not good enough” and “goes only a small way to help SMEs.”

“The situation we are in at the moment — we’re like boxers inside in a ring with our hands tied behind our back,” he said.

“It’s ridiculous what we’ve had to deal with,” said Mr Herlihy, citing concerns about the rise in the Vat rate, increased energy costs, the sick pay scheme, and the rise in minimum wage among other issues.

He added: “There’s going to be a lot of carnage between now and April, a lot of small businesses are going to close. It’s really unfortunate and the Government need to wake up and listen to us.”

Scheme 

Announcing details of the scheme yesterday, Mr McGrath said: “This Government is acutely aware of the ongoing cost pressures faced by businesses and is determined that viable businesses are given every chance to succeed in a challenging trading environment.”

Approximately 58,000 individual customers were availing of the debt warehouse scheme as of January 26, with a balance of €1.72bn outstanding, with almost 70% of those customers warehousing debt of less than €5,000.

Businesses availing of the scheme have until May 1 to either pay their warehoused debt in full, if they can, or engage with Revenue on addressing the debt, including arrangements for a phased payment arrangement.

Interest refund 

Revenue has confirmed that it will operate the reduced interest rate on an administrative basis, pending the legislative change, and that, where a business has already paid warehoused debt which was subject to interest at 3%, it will get a refund of that interest.

Mr McGrath explained that the total debt warehoused has decreased by €1.4bn since January 2022, though €1.72bn remains outstanding, and that the number of businesses in the warehouse has reduced from approximately 105,000 at its peak to just under 57,500.

He said that “this demonstrates that businesses are doing their best to pay the amounts due but some businesses need additional space and time to address their liabilities.

“The key message is that businesses should engage with Revenue: Businesses availing of the tax debt warehousing scheme need to engage with Revenue prior to 1 May 2024,” he said.

“To avail of the flexible approach to tax debt warehousing we are outlining today, they must also file their current tax returns on time and meet their current tax liabilities as they fall due.”