Are you a business owner, proprietary director, non-proprietary director or a landlord in Ireland? Did you miss the 31st October deadline for filing your Form 11 Income Tax Return?
We understand that sometimes individuals may be late filing the income tax return due to various reasons. This article will explore the consequences of a missed deadline and the steps you should take to rectify the situation.
If at any point you need help, reach out to our Client Services Team for expert support.
Consequences of a late Income Tax Return
Late filing surcharge
The late filing surcharge is a penalty fee that is applied when an individual misses the Income Tax Return deadline. The amount of the surcharge depends on how late the return is filed. If the return is filed within two months of the deadline, the surcharge is 5% of the total liability up to a maximum of €12,695. If the return is filed more than two months late, the surcharge increases to 10% of the total liability up to a maximum of €63,485.
Increased risk of Revenue audit
A late Income Tax Return also increases the risk of a Revenue audit. This is because the Revenue Commissioners are more likely to scrutinize the tax affairs of individuals who have not filed their tax returns on time. An audit can be a stressful and time-consuming process, and you may need to engage the services of a tax advisor to help deal with the Revenue Commissioners. If you are selected for an audit, you will be required to provide documentation to support your tax return and failure to comply with an audit can result in further penalties and fines.
Interest due on any late payments
If you are unable to pay your tax liability in full by the deadline, you will be liable to pay interest on the overdue balance. Interest is also automatically added when a payment plan is set up with the Revenue Commissioners. The interest rate is currently set at 0.0274% per day.
Surcharges payable on all director’s income
Directors of companies are required to file an Income Tax Return each year, regardless of whether they receive any income from the company. If a director is late filing the Income Tax Return by the deadline, they will be subject to the same late filing surcharge as individuals. In addition, it's very important to note that the surcharge will be payable on all of the director’s income, not just the income received from the company.
Publication by the Revenue Commissioners
The Revenue Commissioners publish the names of individuals and companies who fail to comply with their tax obligations. The publication can have significant consequences for individuals, including damage to their reputation and difficulty securing credit in the future.
What to do if there is an error on the tax return?
If you discover an error on your Income Tax Return after it has been filed, you should contact the Revenue Commissioners immediately.
Depending on the nature of the error, it may be possible to amend the return. However, if the error results in an underpayment of tax, the individual may be subject to interest and penalties.
For helpful and professional advice specific to your situation, reach out to our team for support.
What happens if you cannot pay the full tax bill?
Contact Revenue or your accountant
Phased Payment Arrangement (PPA)
What happens if you don't pay tax?
Where tax bills are not paid and no effort is made by the tax-payer, Revenue may take enforcement action to collect the outstanding tax. Enforcement action can include:
- Referral to the Revenue Sheriff
- Referral to an external solicitor
- Freeze of bank accounts
- Liquidation or bankruptcy
Do late filings affect next years tax returns?
Yes, late filings impact the next year’s tax returns. This is because along with filing the annual Income Tax Return and paying income tax, business owners and directors are also liable to pay annual preliminary tax – i.e. the tax that you expect to pay for the next tax year.
If you are late filing your Income Tax Return, you could potentially underestimate or not pay any preliminary tax, and therefore, when it comes to filing your tax return next year, you could face paying additional interest on the late preliminary tax from last year.
If you are late filing the Income Tax Return, we recommend that you reach out to our team to discuss your options and let us help you take care of your tax obligations.
If you have already filed your tax return, it’s never too early to begin planning for next year
Frequently Asked Questions
Who files Income Tax Returns?
In Ireland, the Income Tax Return is also known as Form 11. In general, if you earn income from self-employment, rental properties, if you are a director of a company in Ireland or if you receive dividends, you are required to file an Income Tax Return.
There are certain categories of individuals who may not need to file a tax return, such as those who earn less than the income tax threshold or receive income solely from PAYE (pay as you earn) employment.
Reach out to our team if you’re unsure whether you should file a tax return in Ireland.
Tom is a Fellow Chartered Certified Accountant (FCCA) and Chartered Tax Advisor (CTA) and is Accounting Team Manager at Accountant Online. Areas of expertise include Accounting, Compliance, Taxation relating to small business and company directors.