Sole trader - mileage and subsistence expenses

[pintail]

I am a part-time sole trader (I also have PAYE income). When I started sole trading work, I carried on using mileage and subsistence rates as I had been (and am doing) in my PAYE employment. I only recently became aware that as a sole trader, I am not allowed to claim flat rate mileage and subsistence expenses for the purposes of my tax returns. This means that I have made incorrect tax returns for the period 2001-2004, and underpaid tax. I have calculated that my tax under payment is around €1,900.

In mitigation, there are a couple of factors:
- in my first tax return as a sole trader, I included a full breakdown of the expenses, which included mileage.
- in my 2003 tax return, I included an expression of doubt that stated that I was using civil service subsistence rates.

I do not have an accountant, as (until recently) my sole trading income was only a few thousand per year, so was not worth spending money on an accountant.

I know that I will have to inform the revenue about this, but does anybody have any tips for how to go about this, and is there anything I should do first? Will the mitigating factors count for anything?

Thanks

 

[ubiquitous]

I have calculated that my tax under payment is around €1,900.
....
I do not have an accountant, as (until recently) my sole trading income was only a few thousand per year, so was not worth spending money on an accountant.

If you have ended up underpaying tax by €1,900, it certainly would have been worth spending money on an accountant to avoid this. An hour's advice at the outset would hardly have cost you 10% of the €1,900 underpayment. You will probably end up paying more than this at this stage having your errors corrected, unless you want to risk approaching the Revenue on your own, a risk that I would not recommend.

 

[Purple]

unless you want to risk approaching the Revenue on your own, a risk that I would not recommend.

If pintail is otherwise tax compliant and is volunteering the information I would suggest that there is little risk and that Revenue will be very sympathetic when assessing the situation.

 

[ubiquitous]

Risks include

- possible imposition of statutory interest of 12% p.a., which will now have snowballed to up to 60% in respect of the 2001 liability.

- possibility of other mistakes or omissions.

The OP also states that "(until recently) my sole trading income was only a few thousand per year". If their sole trading income is now at a more significant level, they will face an increased risk of a future Revenue audit if a past compliance problem such as the above is handled badly at this stage.