Under-declaring Tax and VAT has serious consequences, as you can tell from the Revenue Commissioners regularly published recent defaulters lists. When the Revenue Commissioners publish a case, it means that the liability is over the ‘publication limit’.
The publication limit is a limit set in legislation – if you are assessed as owing Revenue amounts over this limit, then your name and details will be published on the list of defaulters. As a result most of the cases which are published are quite large.
So who is under-declaring Tax and VAT?
Examples include a private investigator from Dublin 6 who paid a total of €215,000, including €98,000 in tax, €44,000 in interest and €73,000 in penalties – all as a result of under-declaring both Income Tax and VAT.
Another example was a barber from Co Cork who paid €484,000 settlement, this included €235,000 in tax, €76,000 in interest and €172,000 in penalties.
As you can see from the examples above, the penalties and interest charged can be more than the tax that was underpaid in the first place!
All self-employed individuals operate under the self-assessment system, which means that you declare the amount of income you receive and the amount of expenses you incur to Revenue. If they decide to check into your figures – you need to be able to back them up.
How to avoid under-declaring Tax and VAT
Under-declaring figures – whatever the reason, and whether intentional or not – is just not worth it!
The following 5 tips will help you declare the correct amount:
- Assessing your income tax liability– make sure you know what is involved:
- Don’t forget about Preliminary Tax–here’s our quick guide.
- Know your VAT rates and guidelines
- Revenue audits– how likely are you to face one?
- Use good accounting software
Or, outsource your accounting to trained accountants. Accountant Online is a firm of award-winning Chartered Accountants serving Ireland and the UK. Get in touch for a free consultation on 01 905 9364 or send an email to firstname.lastname@example.org