Revenue phased payment arrangement vs a tax funding loan

Interest runs from the day the tax was due, and enforcement can follow if you do not engage. Contacting Revenue early and filing your returns keeps the most options open.

Revenue charges late payment interest daily:

• Corporation tax: 0.0219% per day, roughly 8% a year.
• VAT, employer PAYE (income tax, PRSI and USC) and RCTA withholding tax that applies when a principal contractor pays a subcontractor for work in construction, forestry or meat processing.: 0.0274% per day, roughly 10% a year.

As an illustration, €20,000 of VAT paid 60 days late would attract about €329 in interest (€20,000 × 0.0274% × 60). Revenue states that late payment interest on corporation tax cannot be appealed or reduced once charged.

If the debt stays unpaid and you do not engage, Revenue may take enforcement action. Its guidance lists referral to the Sheriff, referral to an external solicitor, attachment of bank accounts or debtors, and liquidationThe formal process of closing a company, in which a liquidator sells its assets, pays creditors in a set order and dissolves it.. Enforcement adds cost and can damage relationships with banks, suppliers and customers.

Late filing and late payment are treated differently. If a corporation tax return is filed late, Revenue adds a surcharge of 5% of the tax due (capped at €12,695) where the return is filed within two months of the deadline, or 10% (capped at €63,485) after that. Late filing can also restrict claims for loss relief, group relief and excess capital allowancesTax relief that lets a company deduct the cost of plant and machinery used in its trade from its taxable profits over time instead of as a single expense..

So even if the money is not there, file every return on time. It avoids surcharges and lost reliefs, and Revenue requires all returns to be filed before you can apply for a phased payment arrangementAn agreement with Revenue to clear overdue tax in instalments rather than in one lump sum..

A phased payment arrangement lets your company repay tax debts in instalments. Revenue says a PPA can run for up to 36 months as standard, and up to 60 months where the business's circumstances require it, supported by a business case and evidence that the company can keep up the payments.

Who can apply

• The total debt, including interest and penalties, is over €500.
• All tax returns due to Revenue have been filed.
• If the company already has a PPA, new debt can usually be added to it.
• The company agrees to pay its current taxes as they fall due.

How to apply through ROS

1. Make sure every outstanding return is filed.
2. Log in to the Revenue Online Service (ROS) and complete the Electronic Phased Payment Application (ePPA1).
3. Choose the repayment period, the down payment and your preferred monthly collection date, and enter bank details for the direct debit.
4. Upload supporting documents if Revenue asks for them, such as bank statements, six-month cash flow projections and management accountsInternal financial reports, usually monthly or quarterly, showing a company's recent trading, balance sheet and cash position..
5. Wait for a response. Revenue says you will receive a response within ten days and will contact you through ROSRevenue's online system for businesses and agents to register for taxes, file returns, make payments and manage their tax affairs, including corporation tax, VAT, PAYE and RCT. if it needs more information. If you do not respond in time, the application is cancelled.

If your accountant or tax agent applies for you, they must complete a declaration on ROS.

Down payment

Revenue requires a down payment but does not set a fixed percentage. Its guidelines say it will be flexible on the amount and that customers should aim to pay as much as they can, because a bigger down payment reduces both interest and monthly instalments. The down payment is collected by direct debit three working days after approval.

The phased payment interest rate is the same as Revenue's late payment rate: 8% a year for corporation tax and 10% a year for VAT, employer PAYE and RCT.

A PPA is not interest free. Revenue charges interest at 8% a year on corporation tax, income tax and capital gains tax, and 10% a year on employers' PAYE, VAT and RCT. The arrangement includes accrued interest, projected interest over its lifetime and interest on any part-paid periods. If the schedule changes, Revenue recalculates the interest. The reduced-rate PPAs offered in 2020 for COVID-19 related debts are no longer available.

The conditions are strict, so plan your cash flow carefully:

• A failed down payment cancels the PPA automatically.
• If an instalment fails and the second collection attempt also fails, the PPA is cancelled.
• Ten missed payments over the life of the PPA will cancel it.
• Revenue may cancel the PPA if current taxes are not paid or returns are not filed on time.
• A cancelled PPA cannot be reinstated; you must apply again.

If cash is tight during a PPA, Revenue allows you to change the collection date, defer up to six payments over the life of the arrangement, or apply for a payment break of up to six months through ROS. You can also add new debt to an existing PPA through consolidation.

Tax clearance matters for many companies. Revenue's guidance says a tax clearance certificateConfirmation from Revenue that a company's tax affairs are in order. is needed if your company receives more than €10,000 (VAT inclusive) in a year from public sector contracts, or more than €10,000 in grants in a year, and for certain licences and permits.

Revenue's tax clearance manual states that a certificate may be issued where tax arrears are covered by a phased payment arrangement, although applications may be placed under review while a PPA is in place. Where a PPA is sought to obtain tax clearance, Revenue will look for a reasonable down payment. A certificate can be rescinded if a company stops being tax compliant, so keeping up a PPA is important if your business relies on tax clearance.

Some companies choose to pay Revenue in full using a short-term business loan, sometimes called tax funding or VAT funding. The lender pays the money, or lends it to the company to pay, and the company repays the lender in monthly instalments, often over a period of months rather than years.

A tax funding loan may be worth considering where:

• A previous PPA was cancelled, and the company needs to clear a further liability.
• Clearing the debt in full is commercially important, for example for tax clearance on a public contract.
• The company would prefer to keep its relationship with Revenue clear and deal with a lender instead.
• A PPA is not available, or Revenue's required down payment is more than the company can manage.

There are downsides. Lender interest rates and fees on short-term unsecured loans can be higher than Revenue's 8% or 10%. For context, the Central Bank of IrelandIreland's financial regulator and part of the Eurosystem. reports an average interest rate of 5.59% on new SME bank lending in Q2 2026, but short-term and specialist lending is often priced above that. Many lenders ask directors for a personal guarantee, which means directors could be personally liable if the company cannot repay. Approval is subject to status and the lender's criteria, and is not guaranteed. Our guides to business loan requirements and how long a business loan takes explain what a lender will check and how long a decision can take, which matters when a Revenue deadline is close.

The fairest comparison is total cost and total risk over the same period. Ask yourself:

1. What is the total interest under the PPA? Revenue shows projected interest when you apply.
2. What is the total cost of the loan, including arrangement feesA one-off fee for setting up a loan or facility, charged by the lender or a broker, either paid upfront or deducted from the funds advanced. and any early repayment terms?
3. Can the company meet the down payment Revenue may ask for, or would a loan be more manageable?
4. Does the business need tax clearance, and how would each option affect it?
5. Would directors need to give a personal guaranteeA legally binding promise by a director or other individual to repay a company's debt if the company cannot. or security for the loan?
6. Can the company afford the monthly payments alongside current taxes, which must still be paid on time?

For many companies a PPA will be the cheaper option. If the real problem is recurring short-term cash flow rather than one tax bill, our guide to overdraft alternatives may help. A loan makes more sense where speed, flexibility or tax clearance outweigh the higher cost. Your accountant can help you model both.

Our panel of specialist non-bank lenders can consider a general business loan that a company uses to pay a tax bill, as well as short-term and working capital loans. If you decide that route is worth exploring alongside a PPA, tell us what your company needs and we'll tell you honestly whether our panel can help, or where to apply instead. We can tell you the costs and any guarantee a lender asks for; we do not give financial advice. Approval is subject to status and is never guaranteed. We are paid commission by lenders. We do not charge your company a fee and never ask for payment upfront. Welcome Finance is a commercial finance broker, not a lender, is not regulated by the Central Bank of Ireland, and arranges business-purpose finance only for companies registered in Ireland (LTD, DAC, PLC, ULC).