Bank or Taxman

Hi All,
Dont know if this is the right forum so mods feel free to move.

just wonder which ye think is more important,basically the way things are in this country at the moment work has dried up,i have tax to pay in october and business loan to pay for another 2 years,the thing is i can only afford to pay one or the other(ie clear bank loan).dont want to drag out the repayments as i could find myself in a worse situation in 6 months.
which do ye think is more important,will the taxman let me pay it back over time or will i be hit with fines and interest,also will the banks take a reduced amount for an extended period to clear the loan
i have every intention of honouring both liabilities but wonder which is the most important to get sorted first.

Work in the tax sector so will always say pay tax first..serioiusly depends on who you have to deal with

Hi Irish Pride

This is a problem affecting a lot of businesses these days and it's difficult to advise.

When you say "I have to pay tax in October" , are you referring to October 2009 or have you tax outstanding since last October?

The first thing you should do is to speak to your bank. Explain the problems you are facing and they will probably allow you to make repayments of interest only which will reduce the cash flow.

You could also contact the Collector General and tell them you are doing your best. Make a small monthly payment to them.

The government has told us that it is ok not to bother repaying our home loans. So you could quote that when they ask why you can't pay the tax due.

Having said that, the Revenue can freeze your bank account.

There is a public policy issue here; Based upon a true example: builder has units for sale. Let's say he is getting €250k\unit (figure for example purposes only). Last year, the bank were applying €150k to his development loan and letting €100k into his current account. This year, having imposed new terms on a review, they are taking the entire €250k and putting it against the development loan. This means:

1. Bank are keeping his overdraft high and reefing him for interest.
2. Builder has no way of paying his VAT.

Bank know that each sale triggers a VAT liability (circa €30k in the sample figure above). They are deliberately leaving the builder short of the money to pay this. The builder in fact has a positive incentive not to sell any more units ( he is renting them out instead - fortunately it is a small and well located development which rents easily).

Legally, the bank has a first charge and priority over all creditors, including revenue. But when the banks are being bailed out with taxpayers money, this somehow seems wrong. I have considered raising the matter politically but I hate raising my head above the parapet- maybe someone else will do so now.

Brendan said:

The government has told us that it is ok not to bother repaying our home loans.

Click to expand...

When did the government say this Brendan? And which minister is responsible for saying it. Unbelievable if this is the advice they are giving!