Penalty for late tax return

msh

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We (husband and I) filed tax returns this year for the last 5 years. We expected to get a refund but were shocked to discover that we own them 8.5k! My husband is a proprietary director for a company from which he receives NO income and he has been fined for filing a late return. The fine seems to be based on all our PAYE income, rather than the company income. We receive no income other than that which we get from our normal PAYE jobs. What are our chances of successfully appealing this? It seems a bit unfair that someone receiving no income should be fined in this way (and yes, I know Revenue isn't about "fair")
 

coolhandluke

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That's sounds like an absolute joke, and just confirms the heavy handed approach that revenue seem to take with ordinary citizens as opposed to the more connected, unless this is some kind of automatic electronic "fine".

Other arms of the state, would never get away with the sort of carry on revenue seem to believe they can get away with.....time for a serious rethink, in that Dept.
 

Joe_90

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It's a severe penalty all right but it is very easily avoided by filing the returns on time.

Being a director brings responsibilities and one is filing an income tax return.

Unless the company is Non trading there is a major issue here.

Dublin66 is the PAYE guru he might have a view.
 

Clarkey

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We (husband and I) filed tax returns this year for the last 5 years. We expected to get a refund but were shocked to discover that we own them 8.5k! My husband is a proprietary director for a company from which he receives NO income and he has been fined for filing a late return. The fine seems to be based on all our PAYE income, rather than the company income. We receive no income other than that which we get from our normal PAYE jobs. What are our chances of successfully appealing this? It seems a bit unfair that someone receiving no income should be fined in this way (and yes, I know Revenue isn't about "fair")
Where there is no income from the proprietary directorship Revenue are usually ok with removing the surcharge. Haven't dealt with one in a while but this used to be the case. Worth a phone call
 

Bronte

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I'd try the phone call approach, if you find the right person, who can 'fix' the computer you might be lucky. Also could try the calling into the office route with a tale of woe and how you cannot afford this etc. Not sure if they still have the power/discretion to delete the surcharge. But due to the recession, revenue have been instructed to be a bit more lenient.
 

msh

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Coolhandluke, Clarkey and Bronte - Thank you for your replies. We'll try phoning. I know you can sometimes be lucky with the person you get. It would be reasonable to penalise based on the income from the directorship all right.
 

T McGibney

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Where there is no income from the proprietary directorship Revenue are usually ok with removing the surcharge. Haven't dealt with one in a while but this used to be the case. Worth a phone call
The surcharge legislation clearly excludes proprietary directors who don't earn a salary from their proprietary directorships. The OP may need to point this out to Revenue.
 

Joe_90

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Tommy can you give a reference for this .

My understanding is that a proprietary director was a chargeable person and that PAYE (on all employments husband and wife) was not allowed before deducting the surcharge. But would be delighted to be wrong.
 

T McGibney

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Not offhand Joe, too much on this morning, but the Revenue FOI notes on the 1992 Finance Act & proprietary director surcharge are very clear on this.
 

msh

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My husband phoned and they are sticking to their guns on it. They said to apply in writing. Tommy - would really appreciate a reference at some stage when you get a chance.
 

msh

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Tommy - I googled your comment above and found a newsletter from 1999 from revenue at http://www.revenue.ie/en/practitioner/tax-briefing/archive/tb36.pdf It states that the penalty is based on your income from the directorship. So 10% of zero is zero! I'll print that out, highlight the relevant section and send it in to them. Thank you for your help. Much appreciated. I'm presuming that there has been no change to the legislation since then?
 

T McGibney

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I've located the following AAM discussion http://www.askaboutmoney.com/showthread.php?t=164089

I think both your source and the above both refer though to non-proprietary directors so it mightn't be what you need. Still I'd suggest, at least for the moment, that you use it to open your discussion with Revenue. Maybe someone else can locate something more definitive?
 

mandelbrot

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I've located the following AAM discussion http://www.askaboutmoney.com/showthread.php?t=164089

I think both your source and the above both refer though to non-proprietary directors so it mightn't be what you need. Still I'd suggest, at least for the moment, that you use it to open your discussion with Revenue. Maybe someone else can locate something more definitive?
The legislation is quite clear on this - S.950(1)(c), which has been replaced from 1/1/2013 by S.959B(1)(c), excludes from the definition of a chargeable person, an individual who is a director (no distinction between proprietary or non-proprietary) of a company which throughout a 3 year period up to 5 April in the year of assesment has negligible assets, hasn't carried on any trade or business, and hasn't paid any charges on income.
 

msh

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Non-proprietary directors aren't subject to the late filing charge so I'd be hopeful that the newsletter would apply to us. I know what I've googled previously doesn't clearly state what PAYE income the charge applies to but the newsletter states that non-proprietary directors aren't subject to the penalty and then goes on to state that the penalty is calculated based on director income. Maybe I'm just being overly optimistic and reading it incorrectly. I have to say I'm confused by it all and appreciate the help I'm getting here.
 

msh

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The company has been trading (and is fully compliant from a tax perspective) so my husband is a chargeable person. What I'm hoping for is that the penalty is based on income from the directorship rather than all income. We thought (obviously erroneously!) that as there was no income from the directorship, the normal PAYE rules regarding filing your personal return were the ones that applied to us.
 

Joe_90

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The legislation is quite clear on this - S.950(1)(c), which has been replaced from 1/1/2013 by S.959B(1)(c), excludes from the definition of a chargeable person, an individual who is a director (no distinction between proprietary or non-proprietary) of a company which throughout a 3 year period up to 5 April in the year of assesment has negligible assets, hasn't carried on any trade or business, and hasn't paid any charges on income.
I'm not being pedantic had a conversation with someone last week about this and I'm not aware of relief.

I don't see anything in the reference above to the director not receiving a salary being exempt having to file a return.
 

msh

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Joe - I'm not talking about relief now. He is not exempt from filing a return. I know that. It is a question of what income the penalty should be calculated from. The newsletter stated that the penalty was calculated based on the income tax liability from the directorship income. I am hoping that that means the penalty should be calculated as zero as the directorship income was zero. They have calculated the penalty based on all income rather than directorship income.
 

censuspro

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The legislation is quite clear on this - S.950(1)(c), which has been replaced from 1/1/2013 by S.959B(1)(c), excludes from the definition of a chargeable person, an individual who is a director (no distinction between proprietary or non-proprietary) of a company which throughout a 3 year period up to 5 April in the year of assesment has negligible assets, hasn't carried on any trade or business, and hasn't paid any charges on income.
The reason it doesn't differentiate between a proprietary and non proprietary is because non proprietary are not obliged to submit a tax return.

OP, would be interested to know the outcome of this, please keep us posted.
 

mandelbrot

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I'm not sure what the confusion is here -


The legislation which I've already quoted indicates:
  1. a chargeable person is obliged to file a return
  2. S.959B (formerly S.950) clearly excludes from the definition of a chargeable person, a director of a non-trading, dormant company
This is made quite clear in the Notes for Guidance (http://www.revenue.ie/en/practitioner/law/notes-for-guidance/tca/part41a.pdf) at page 4:

"This section excludes certain persons from the definition of "chargeable persons" in section 959A, namely it excludes persons:

whose only source of income is emoluments taxed under the PAYE system (under Part 42) provided that person is not a Director of a trading company or the jointly assessed spouse / civil partner of a Director
"

It is also made explicit in the Revenue Statement of Practice here (http://www.revenue.ie/en/practitioner/law/statements-of-practice/sp-it-1-93.pdf) which states:

"EXCLUSIONS IN THE 1992 ACT
3.1 The 1992 Act excludes certain types of directors from the new provisions, for example, directors of shelf companies, directors of genuinely dormant companies and others who take up temporary directorships in the period prior to a company commencing activity.​

3.2 These examples are covered by the exceptions listed in the Act. The exceptions are directors of a body corporate which during the three years ending on 5 April in the year of assessment -
  1. was not entitled to any assets other than cash on hands, or a sum of money on deposit within the meaning of Section 230 Finance Act, 1992, not exceeding £100, and

  2. did not carry on a trade, business or other activity including the making of investments and

  3. did not pay charges on income within the meaning of Section 10 of the Corporation Tax Act, 1976."
I'm not sure what else could be needed to clarify this any further...
 
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