No tax paid on shares...how lenient is tax man re. penalty + interest?

I was given Restricted Stock Units (RSUs) by my employer (a US Multinational) over the past few years. RSUs are essentially a gift of shares over time (I didn't know what they were at the time!) However, my employer gave very little information on the tax liabilities assosciated with these RSUs and there were also some other company complications that further clouded the issue (company split in 3). Some of these RSUs have vested over the past two years and I am only now aware that I was liable for tax (at 41%) within 30days of the vesting since these RSUs are considered income.

So I need to pay my tax liability. But my question is do I also need to pay penalties plus interest?

If I contact the collector general and explain the reasons why I didn't pay on time is the tax man liable to be lenient, or does Revenue demand penalty plus interest in all cases no matter what the circumstance?

Any help would be appreciated.

Not in all cases penalties and interest are applied. By approaching revenue making a full disclosure the penaltly will at least be mitagated and if the tax due was not significant it may be waived.

Arch2 said:

Not in all cases penalties and interest are applied. By approaching revenue making a full disclosure the penaltly will at least be mitagated and if the tax due was not significant it may be waived.

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Thanks Arch2. Do you know if it's better to write a letter to the taxman explaining the situation, or to call into the local office (with a cheque book)?

You will have to complete tax returns for each year in question, calculating the taxable element of your RSUs and declare them on the returns together with all other income and claims for tax credits etc.

It is likely that you will have to pay the late filing surcharges 10% of tax when return is not submitted within 2 months after filing deadline.

If you do file your returns voluntarily, penalties may well be mitigated, and interest may or may not not be charged on late payment at 0.0273% per day or part of day.

I'm about to submit tax return for 2010. I've received some RSUs. Apart from 41% income tax on them, do I have to pay 2% income levy as well ?

Arch2 said:

Not in all cases penalties and interest are applied. By approaching revenue making a full disclosure the penaltly will at least be mitagated and if the tax due was not significant it may be waived.

Click to expand...

This was my experience. In 2004, I'd applied for non-residency status and left the country when an ex-employer bought out my stock options. As I was out of contact, I didn't know until well after the fact.

After explaining to Revenue, I never heard anything back and assume that the amount of tax I owed wasn't worth collecting - being only a little fish, I didn't have a huge amount of stock. Might be different now though!!