Archives

Can’t Pay Your Income Tax, What Should You Do

The tax deadline set for “Pay and File” by October 31st by the Revenue Commissioners is fast approaching, so like it or not, in order to avoid possible interest surcharges and prosecution, it is time to put your house in order.

Self-assessed individuals have three tasks to complete by this date:

1. File 2009 income tax return.

2. Pay any balance of income tax due for previous year (2009).

3. Pay preliminary income tax for current year 2010.

If you find you can’t pay your tax bill, and there are many who will find themselves in this category, the most important thing is do not ignore demands.

If there’s a mistake due to faulty calculation, you can get this quickly checked and corrected, but if you can’t pay the bill straight away, due to your business having deteriorated over last year, in most circumstances you may be able to come to an arrangement with the Revenue Commissioners.

Always pay any outstanding balance for income tax due for the previous year, as a priority, since once the current pay and file date passes, any unpaid income tax, for any previous year, becomes a debt for collection by the Revenue’s collection system. If you cannot clear this previous year’s debt in full, then contact the Collector General’s office to see if you can pay using an instalment arrangement. The Revenue can and will move quickly to collect any outstanding debt, so it is important to clear all outstanding balances as far as is fiscally possible.
Keep in mind however that agreed instalment arrangement’s are by no means a soft option for the self assessed individual and businesses are charged for late payment at 8% per annum.

In previous years businesses have used overdraft facilities to pay their preliminary tax, now with the state of bank credit, in most cases this is no longer an option. If you cannot pay your  preliminary tax for the current year in full and by the required deadline you should pay as much as you can and as soon as you can.

Remember that your preliminary tax payment can be the lesser of 90 per cent of your 2010 tax liability, 100 per cent of the previous years liability, or 105 per cent of your 2008 liability where you pay by direct debit.

If your business circumstances have deteriorated significantly since the beginning of 2010, you may consider basing your preliminary tax payment on 2010 calculations thus clearing your debt quickly and minimising your exposure to any interest charges.

Regardless of your fiscal ability do file your tax return. Revenue’s computer systems can quickly identify when someone obliged to file returns has failed to comply and a surcharge of up to 10 per cent will be charged on these late returns.

Failure to file any tax returns ultimately results in publicised and often embarrassing open prosecution.

Facebooktwitterlinkedinmail

Leave a Reply

You can use these HTML tags

<a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>

  

  

  

13 − 9 =

This site uses Akismet to reduce spam. Learn how your comment data is processed.