Rise in judgements show firms still not out of Covid-19 woods

End of Irish Government Tax Debt Warehousing Scheme coincides with rise in commercial judgements against firms.

Businesses are not yet out of the woods from the hangover of Covid019 with 40% of commercial judgements against businesses filed by Revenue.

The timing is telling as the rise in commercial judgements come at the same time as the conclusion of the Tax Debt Warehousing Scheme

“This trend underscores the critical importance of rigorous credit checking and due diligence even during a growth phase”

New data from CRIFVision-net. indicates that the number of commercial judgements rose by 130% in the first half of 2024, with consumer judgements also rising by 56%.

The average value of commercial judgements rose from €25,320 to €64,038, a 152% increase, with industries such as manufacturing (450%), hotels and restaurants (233%), construction (132%) seeing a major rise in the occurrence of commercial judgements.

The consumer judgement value took a meteoric rise with an increase of 560% (€27m compared to €182m) despite only 56% more judgements being made compared to 2023, according to the latest figures from CRIFVision-net.

Consumer judgment average value for H1 2024 was €944,212, compared to €52,049 in H1 2023, representing a 1,714% increase.

Rise in commercial judgements

Business woman in white suit.

Christine Cullen, managing director, CRIFVision-net

The 40% rise in commercial judgements against businesses have come at a similar time to the conclusion of The Tax Debt Warehousing scheme.

This scheme allowed businesses to temporarily defer VAT and Employer PAYE, certain self-assessed income tax liabilities, and Temporary Wage Subsidy Scheme and Employment Wage Subsidy Scheme overpayments on an interest-free basis.

The hospitality sector in particular has faced the brunt of commercial judgements, with 113 in H1 2024, representing a 223% increase year – on – year.

At a time when the hospitality sector has already struggled in the aftermath of the pandemic, these figures suggest that the difficulties the sector have faced may not be over just yet.

Increase in start-ups 

Just over half the counties in the country noted an increase in start-ups for H1 2024, with Carlow (19%), Louth (17%), Waterford (17%), Galway (14%), Dublin (9%) seeing positive growth.

Counties seeing a reduction in startups include Roscommon (-31%), Kilkenny (-24%), Tipperary (-15%), Monaghan (-14%).

Amongst other counties with the largest populations, Limerick (1%) and Cork (-2%) saw a slow start to the first half of the year with minimal growth and some contraction in start – up figures.

Mounting financial pressure

“The judgment figures reveal that, during the first six months of 2024 we have seen a significant increase in financial and legal actions in Ireland for both Business and Consumer debt recovery,” said Christine Cullen, managing director of CRIFVision-net.

“This highlights mounting financial pressure, a lack of forbearance and a growth in relying on legal recourse for debt recovery.

“Key contributing factors include the increased cost of living, inflationary pressures, and higher interest rates, all of which has put pressure on the ability of both corporates and consumers to meet their financial commitments.

“Within this economic environment, there appears to be less tolerance for late payments, particularly given the cashflow challenges potentially arising from these increased consumer and business overheads. The conclusion of the Government’s Pandemic support measures has also been cited as a challenge for many Irish-based businesses. 

“This trend underscores the critical importance of rigorous credit checking and due diligence even during a growth phase. These practices will empower businesses to make more informed business decisions and gain deeper insights into the financial standing of potential customers and partners.

“On a positive note, we have seen a four percent increase in company startups. Whilst this represents only modest growth, it again demonstrates the resilience of the Irish domestic economy at a time of renewed economic uncertainty at a global level. We anticipate this growth in startup numbers will continue into the second half of the year.”

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