Late tax return by proprietary director

[Brendan Burgess]

I was asked the following question and I am not sure of the answer.

She is a contractor with her own limited company.


When she made her personal tax return for the year, she owed only €500 which she paid.

But she missed the deadline and Revenue are asking for 10% of the full tax bill around €2,500 .

She feels that this is very unfair as she had actually paid almost all the tax.

The company is no longer operating and she is in serious financial difficulty. She is getting Jobseekers Allowance of around €195 a week and has no other income and lots of debts.

What is the Revenue's practice in relation to this?

 

[DB74]

Revenue's practice is usually pretty hardline in these (and all other) cases lately where they are imposing penalties and charges on all and sundry.

However all you can do is appeal and plead poverty, emphasising the fact that Revenue aren't actually out of pocket because the tax itself has been paid and hope that someone in Revenue sees sense and waives the penalty/interest.

 

[CXC]

Unfortunately this is an anomoly but is contained in the legislation. Were she a sole trader the penalty would be 10% of the outstanding tax - but because she is a director it's 10% of the total tax liability for the year (in effect disregarding the fact that some tax hass already been paid)

 

[T McGibney]

Brendan, she should write to Revenue and appeal to them to set aside the surcharge on the basis of her poor circumstances. I expect that they will show her leniency. If they don't, she can ultimately bring her case to the Ombudsman.

 

[Graham_07]

Brendan, she should write to Revenue and appeal to them to set aside the surcharge on the basis of her poor circumstances. I expect that they will show her leniency. If they don't, she can ultimately bring her case to the Ombudsman.

Should everyone therefore with poor circumstances and late returns be afforded such leniency? Why? Proprietory directors have obligations in law to both their companies and their own taxes. The legislation is clear. If one acts as a proprietory director then one should be aware of the consequences of late filing in no less manner than a sole trader.

A Sole trader with a late return is liable to the surcharge at 10% of the liability BEFORE any preliminary tax paid, not just on the balance.

A proprietory director is similarly liable to 10% of the liability BEFORE any tax paid.

 

[T McGibney]

Should everyone therefore with poor circumstances and late returns be afforded such leniency? Why? Proprietory directors have obligations in law to both their companies and their own taxes. The legislation is clear. If one acts as a proprietory director then one should be aware of the consequences of late filing in no less manner than a sole trader.

Graham, I'm only trying to help the woman. In my book, if she is on the dole and broke, she should at least be entitled to appeal for leniency in relation to this surcharge. If you feel that the Revenue should throw the book at her regardless of her circumstances, fair enough, but we'll agree to differ.

A Sole trader with a late return is liable to the surcharge at 10% of the liability BEFORE any preliminary tax paid, not just on the balance.

A proprietory director is similarly liable to 10% of the liability BEFORE any tax paid.

While this may be true, it isn't exactly the point at issue here.

A sole trader with PAYE income has their surcharge calculated on the tax liability net of PAYE tax deducted on their PAYE income.

A proprietary director with PAYE income has their surcharge calculated on their entire tax liability for the year, including PAYE tax deducted on their PAYE income.

This is hardly a level playing field.

 

[Graham_07]

Graham, I'm only trying to help the woman. In my book, if she is on the dole and broke, she should at least be entitled to appeal for leniency in relation to this surcharge. If you feel that the Revenue should throw the book at her regardless of her circumstances, fair enough, but we'll agree to differ.

I'm not saying throw the book at anyone, just apply the law consistently. If an Inspector applies surcharge to one case and not another, where do you draw the line? When does one case become more deserving than another? I have appealed surcharges myself won some & lost some. By all means let her try.

This isn't exactly true.

A sole trader with PAYE income has their surcharge calculated on the tax liability net of PAYE tax deducted on their PAYE income.

A proprietary director with PAYE income has their surcharge calculated on their entire tax liability for the year, including PAYE tax deducted on their PAYE income.

This is hardly a level playing field.

In relation to sole trader with both PAYE and self-employed income, that is correct. Unfortunately there are lots of things not level when it comes to the Irish taxation system.

 

[T McGibney]

I'm not saying throw the book at anyone, just apply the law consistently. If an Inspector applies surcharge to one case and not another, where do you draw the line? When does one case become more deserving than another?

Its hard to tell who is most deserving of leniency, but on a practical level, I don't see the point in Revenue imposing harsh financial surcharges on individuals for technical breaches of tax return filing rules, when the individuals concerned are on social welfare and probably having to resort to Community Welfare (or moneylenders ) to pay the surcharges.

I have appealed surcharges myself won some & lost some. By all means let her try.

My point entirely.

 

[Pat Bateman]

I was asked the following question and I am not sure of the answer.

She is a contractor with her own limited company.


When she made her personal tax return for the year, she owed only €500 which she paid.

But she missed the deadline and Revenue are asking for 10% of the full tax bill around €2,500 .

She feels that this is very unfair as she had actually paid almost all the tax.

The company is no longer operating and she is in serious financial difficulty. She is getting Jobseekers Allowance of around €195 a week and has no other income and lots of debts.

What is the Revenue's practice in relation to this?

Brendan, the lady (or her representative) should contact Revenue and request the waiving of the surcharge. Her inability to pay, the fact that 98% of her tax was paid through the PAYE system and (if applicable) her previously clean record in relation to tax compliance should be cited.

This type of sitaution is anomalous and grossly unfair in my view. However, unless her tax compliance history is particularly horrific, I'd be very surprised if Revenue don't agree to waive the surcharge.

 

[mandelbrot]

Yes it's certainly unfair that the same computational rule isn't applied to the director as is applied to a sole trader with PAYE.

I've seen this exact case two or three times, once in Waterford district where the inspector accepted the argument, and another instance in Wexford (I think) where they wouldn't budge.

But having said that, if the lady in question appeals it upwards, I'd say she'll eventually speak to someone reasonable who'll do the decent thing, rather than have a load of hassle over €250 surcharge.