Income Tax owing from 2003

M

MrConsultant

Guest
I recently retired and want to do some consultancy work. I have been a PAYE taxpayer for 40 years and never owed tax. I applied for a tax clearence certificate and had it refused because of an uncleared tax liability in year 2003 of which I was not aware.
I do not even know what this tax is on but my question is - surely there is some time bar on this as the Revenue did not code it to my PAYE when I was working.

Any advice would be appreciated
 
There is no limit on collection of tax debt. You need to contact them and ask what the matter relates to.
 
Thanks Graham. I will call them today. The issue is probably how this can be paid. In order for me to work as consultant I need the tax clearence cert. I am on low retirement income now and the bill for unpaid tax is 3329 Euros (assuming its correct)

Do they have a method of collection or can it be coded to future earnings.

Thanks
 
That's a ferocious amount of tax to owe for 7 years. Assuming it is payable, if I were in your shoes I would keep my head down and pay it as quickly and quietly as possible. The last thing you need is for the tax office to say 'what about the interest' if you now propose paying them in instalments.
 
Mr Consultant - you first need to find out what the underpayment relates to. My advice would be to talk to a tax consuiltant about it and understand why the underpayment arose. it does seem quite significant.

Did yuou have share options?
 
Ned is correct. If it relates to share options then more than likely the tax is payable on a self assessment basis and interest would then apply. I have noticed a lot of this happening as regards share options. However dont just pay it. It is not unusual (!!!) for the Revenue to make errors. Find out what the debt relates to and if you do not understand the answer you may need to get help from an accountant to explain it. It seems crazy that you would have a debt 7 years old and the revenue would not have tried to collect it.
 
2003 Tax Liability

I have a similar case as of today. I recently applied for a Tax Clearance Cert for my father as we are applying for a grant to carry out essential renovations after he recently suffered a stroke. Today a letter arrived saying that he owed tax for the period of 2003 and until this has been paid the Cert can not be issued. I understand this decision but I can not understand how this could have happened. We have been using an accountant for the past number of years but now I am wondering was this a time when he did not have an accountant and may not have completed an annual tax return for 2003. Every year PAYE employees retire and may never have had to pay an accountant during their working lives. If they now have other sources of income from one or possibly two private pension schemes, should they be employing an accountant to complete annual income tax returns, if they now have a total income of say, €25,000? Am I right in saying that the state pension (for a private sector workers) is paid out, exempt of tax and that pensioners who are in receipt of a second private pension may have to do annual tax returns, to pay tax on their state pension? If this is the case, it seems very unfair as I am sure many older pensioners may not be aware of this and could possibly be landed with substantial tax liabilities should they ever have to apply for a Tax Clearance Certificate.
 
Revenue should be willing to facilitate an instalment arrangement. However, in cases where tax clearance is required they will look for a downpayment of 40% of the tax liability (rather than the more normal 20-25%). The interest rate is also penal.
 
Thanks for that Baz but do you know if pensioners are expected to complete annual tax returns if they receive anything more than the normal state pension? Would I be right in saying that the some of the money that they receive in one hand from the government as a pension may have to be given back from the other hand, even if they only have a moderate income?
 
What is normally done is that the private pension payer operates a payroll system for all the pension recipients and they are on Revenue's records as being employees of the private pension provider.

The appropriate tax credits are sent to private pension provider and reduced where appropriate by the amount of the state pension.

Where there are a number of private pensions this can get messy as credits are not properly allocated or pension providers do not act on the tax credit certs properly.

Obviously for any of this to work properly it is improtant to notify Revenue as to who is paying what so they can allocate credits the best way.

Many pensioners would also have (had) dividend income which is subject to income tax at the marginal rate, it may be this that caught out your father?

Sybil
 
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