The taxpayer must pay preliminary tax for the current year together with the return of tax and balance for the previous year and making the tax return. Preliminary tax (including income tax PRSI and USC) must be paid on account payment during the current year for the current year liability.
Because the final tax liability , will not be known, the taxpayer may avoid interest by paying in one of the following bases;
- 90% of the ultimate liability for that year;
- 100% of the liability for the preceding year liability; or
- 105% of the liability for the pre-preceding year, if paying by direct debit.
Where persons are jointly assessed the preliminary tax is based on the joint assessment liabilities.
Preliminary tax must be at least equal to the lowest of the amounts under the above options. If the person was not obliged to make a tax return in the previous year then the relevant amount may be nil.
In the case of the third option, the preliminary tax must be paid by direct debit over a period of at least eight monthly instalments. The balance of tax must be paid by 31st October in the following year.
In addition to the preliminary tax liability the balance for the previous year in respect of which the tax return is made must be paid. The remaining PRS I and USC liability must also be self-assessed and paid.
Where there is an amended assessment by Revenue on foot of a full and true return then this must be paid within 30 days of notice of assessment.
The self-assessment included in the return includes a computation of income in the various categories. The standard form 11 requires particulars of each type of income. The assessment includes the taxable income, losses capital allowances tax credits tax allowance et cetera. Also included are any surcharges. PRSI and USC must also be self-assessed.
Where the form has been completed online ROS generates an assessment based on the earlier parts of the return which the taxpayer may accept or amend. This is in no way a revenue assessment and is an automatic computation based on the information inputted.A notification or acknowledgement of the self-assessment issues via ROS.
Revenue can make assessments of income tax. This may occur where no return is made or where there is no is self-assessment in the return or the Revenue has grounds to believe that the return does not make a full and true disclosure of the tax payers affairs and the issues relevant to tax liability.
A repayment of tax must be claimed within the same four-year period as applies to making an amended assessment for the has been a full and to return.Interest on tax overpaid tax is paid at 0.011% per day.
Where the overpayment arises because of a mistake by the Revenue and the claim is made within the required period, interest runs from end of the period, in which the payment arises or the date of payment, if later. If the payment is due to the mistake of the taxpayer, interest runs from 93 days after the day on which the valid claim for repayment has been made.
Interest is payable on tax not paid when due. This covers income tax USC PRSI and other taxes.This will apply in respect of preliminary tax and any balance and other tax liability arising in each case from the due date.
Interest may arise when the preliminary tax payment has been paid on a basis which is incorrect because it does not exceed the required percentages of the current previous or prepeniltimate tax year liabilities.
If the return is not properly made because it is not a full and true return this will in turn have implications in relation to the surcharge and interest. A bone fide accepted expression of doubt may avoid interest.
Interest is payable at 0.0274% per day. Credit is given for tax accounted for by deduction, such as by PAYE.
Where a tax return is not made by the required date making the required full and true disclosure interest penalties and surcharges will arise. Where the return is incorrect or incomplete but was not deliberately or carelessly made, it may be accepted as duly made if the error is promptly corrected.
Revenue may issue notices requiring further information. Where they are not duly complied with the return may be deemed to be filed late.
It is also condition of a full return that a local property tax return has been made and the relevant tax duly paid. If the local property tax return is made unpaid thereafter the surcharge is limited the amount of the local property tax itself.
If the return is late or is deemed not to be duly made on time there is a surcharge of 5% of the tax liability up to €12,695 (late but within two months) or 10% of the tax liability to a maximum of €63,485 after it is two months late. The return must be made and the tax must be paid by the required date.
The surcharge arises if the tax is not paid on time or if the return is not made by the relevant date, even if tax is paid. The surcharge applies to income tax USC PRSI. Tax already paid such as by way of PAYE and other withholding is deducted.
The surcharge must be self-assessment and paid. It may be collected in the same manner as tax. It also affects whether preliminary tax obligations for the following year have been properly paid.
In exceptional circumstances, the Revenue may reduce or waive entirely the surcharge. These must be shown to the satisfaction of revenue Commissioners. The surcharge may be waived in the context of a full settlement which will usually involve penalties taking place on foot of an audit or an improper disclosure.
Preliminary tax prepaid for that year in the previous year is disregarded.In the case of a directors PAYE on salaries and benefits is not deducted in computing the surcharge.
Expression of Doubt
An income taxpayer may declare an expression of doubt about the tax treatment of a particular item or matter. Provided the expression of doubt is genuine, the taxpayer will not be penalised or charged interest if the Revenue later disagree with the return.The taxpayer must have made a full and to return.
The form 11 and online tax return form has an area for inclusion of the expression of doubt. Full particulars of the relevant facts and circumstances must be disclosed. The basis for the doubt and applicable law must be set out. Supporting documentation must be furnished or identified. The amount of tax in question must be specified.
Revenue may not accept the claim is genuine in light of published Revenue guidelines or if the opinion is formed that is done with the intention of evading or avoiding tax. Revenues determination in this regard can be appealed within 30 days.