Tax clearance cert - 2011/12 ESPP issue

J

JoeCoeur

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Hi folks,

Looking for some input to understand how best to resolve a tax issue which is preventing revenue issuing me a tax clearance cert.

The issue appears to be because I did not declare discounted shares I received in 2011 and 2012 through an employee share purchase plan. I have not sold these shares but the revenue have flagged these years as outstanding and it looks like I need to complete a form 11 for these years now.

My only defence is that I did not understand the tax implications at the time and I had incorrectly & naively assumed my company managed any tax implications of the espp on my behalf given they were handling my paye.

Having looked into it, I'm now concerned that I may be liable for fees and charges which will be calculated as a percentage of my overall tax liability for each of those years (including the paye tax paid in those years) and not just calculated based on the amount owing.

My questions are as follows:

1. Can anyone confirm what the formula is that the revenue could apply here in a theoretical scenario where my total tax paid in 2011 was 25k and the total undeclared benefit/income that I received for acquiring the shares at 15% below market value in 2011 was 750e.

2. Can anyone advise on how best to proceed here based on their experience dealing with similar issues or how severe the revenue typically handle scenarios like this?

3. Should I just go ahead and complete form 11 online and wait for the outcome, Or is there a different avenue to take with the revenue to try to plead my (weak) case?

4. Would there be any benefit in getting an accountant to help here to help plead my case or is that just throwing good money after bad?

Sincerely appreciate any input or advice with this, many thanks in advance.
 
Hello.. are you saying that the undeclared income was 750 euro only???

Are you registered for ros?

If you are plug in all your figures in to ros and see what the resulting tax bill is. There will most likely be a 10% surcharge.. but you may not have claimed all credits, medical expenses...

There isn’t enough info above to properly help .. you would have to list say you p60 income , your paye, etc
 
Many thanks for your reply.

Yes, the undeclared amounts are max 1000 each year.

My only other income would have been from a single paye employer. I need to confirm the total amounts but the total tax paid would have been in the region of 20-25k, not sure of the exact breakdown.

Savings accounts would have had dirt taken at source so no other income sources.

I don't think I was eligible for any tax credits.

Yes, I am registered for ros.

Just looking for a general formula outline and whether the penalties are calculated based on a percentage of my total tax liability(I.e. 25,750 in the above example) or the amount owing (I.e. 750 in the above example)
 
Get you p60s.. and details of the shares ..

The tax will be based on the underpayment which hopefully will just be on the shares..

I would say

Undeclared Income - 1k
Tax say 41%, 4%, say 8% =530 very ruff..
Surcharge 53

Total due 583

The surcharge won’t be on the pre paye liability unless you are a proprietary director ..,

They might come for interest too..

As I say put it in to ros, claim credits.. think about rent credit, trade union , medical , services charges .. some of those might have still been around then..and it mightn’t be as bad as you think!
 
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I'm very much open to correction as it's been a while since I dealt with this stuff, but I don't think you can claim credits from more than 4 years back (ie prior to 2013 at this stage).
 
As far as I know you can certainly claim credit but there is a time limit on refunds.. so you can mitigate your liability but can’t get a refund..
 
JoeCoeur said:
My only defence is that I did not understand the tax implications at the time and I had incorrectly & naively assumed my company managed any tax implications of the espp on my behalf given they were handling my paye.
Click to expand...
No offense but I chuckle when I hear these chestnuts every now and then.
Anyway, am I missing something here - would it not be easier to fill in form 12 ? Get p60 figures for 2011 an 2012 and fill in the two forms and send them off with the extra income not declared for each year. Then revenue will send a P21 statement with the outstanding amount.
 
elcato said:
No offense but I chuckle when I hear these chestnuts every now and then.
Anyway, am I missing something here - would it not be easier to fill in form 12 ? Get p60 figures for 2011 an 2012 and fill in the two forms and send them off with the extra income not declared for each year. Then revenue will send a P21 statement with the outstanding amount.
Click to expand...

Yep, I realise this is a poor defence and I have since realised how naive I was on things like this. I only mention it because I would have thought espp share discount would be quite a common oversight for those that have only had paye income up to that point.

Will look into the form 12 avenue again to see if this is an option, thanks.
 
The reality is that your employer may have missed the taxing issue here. Since 1st January 2011 share awards, with the exception of share options, are taxable at source by the employer under the PAYE.

As mentioned this only exception is share options and this may have been classified as a share option and share options and ESPP plans can be very close.
 
FWIW it's been my experience in a couple of places is that awards are taxed at source, but the onus is on the employee to make a return for ESPP schemes.
 
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