Fears for future of Limerick companies as Sheriff may be called in over Covid debts

THERE are fears for the future of small firms across Limerick this week as Revenue begins to call in Covid-19 debts.

Business owners have begun to receive letters seeking repayment of the so-called 'warehoused tax debt’ where firms left facing a cashflow issue during the pandemic could defer paying duties to a later date.

That date has now arrived, and with hundreds of millions owed across the State, the taxman has not ruled out using sheriffs to collect money outstanding.

It’s caused “intolerable” stress for many small business owners across Limerick, with most not wanting to go public for fear of reputational damage.

Paul Flannery, the Limerick representative of the Vintners 'Federation of Ireland described it as a “hammer-blow" to many hard-hit hospitality traders, already grappling with rising electricity bills and the cost-of-living crisis seeing their customer base dwindle.

Limerick Chamber has asked Revenue to take a “flexible” approach and its chief executive Dee Ryan said it would be an “absolute injustice” if any business which survived Covid-19 was to go to the wall now.

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And local TD Willie O’Dea has put down an urgent parliamentary question with Finance Minister Paschal Donohoe calling for him to introduce legislation to force Revenue to pause the collections.

“It’s the last thing a business needs,” the qualified accountant said.

“Government is rolling in with its announcements to help businesses suffering from an increased energy cost. For the Revenue to come along and insist on collecting this money could push many of these businesses into bankruptcy and cost many jobs.”

Doing this, Mr O’Dea said, would be a “self-defeating” exercise, pointing out that more people will need to be paid social welfare and tax collection will drop.

For its part, Revenue has declined to comment, but confirmed to The Sunday Business Post that it has referred €183.5m of so-called ‘bad debts’ to the enforcement stage, which will likely mean the intervention of sheriffs or solicitors.

“It’s not possible to estimate how much debt for which debt warehousing has been revoked will be at sheriff enforcement at a future date,” it added.

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Former councillor Bill O’Donnell said he saw such a letter from the Revenue.

Fortunately for him, the self-employed solicitor is not owing a balance.

But the Bruff man acknowledged it’s a concerning time for many businesses and urged Revenue to afford businesses which show viability “leniency” and time.

He compared it to the possessions list, where the homeowner is given every chance to save their house.

“Possession orders are only given in the absolute extreme circumstances, and it’s only as a matter of last resort, the court will make that order. Revenue needs to take a similar attitude, but my experience in the past suggests Revenue does not really operate in that way,” said Mr O’Donnell.

Donal Cantillon, himself a practicing accountant and president of the Limerick Chamber said: “Businesses are still in a precarious position regarding their viability. There’s no point undoing the good work government has done during Covid to put added pressures on business now. It’s one thing they can do without.”

Mr Flannery added: “Businesses are not paying because they can’t. It’s not because they don’t want to – it’s just they cannot.”

One impact of any business closures would be reduced money going to the council in terms of commercial rates.

Councillor Michael Collins says he has huge “fears and concerns” around this, and plans to raise it with local authority finance bosses.