PAY AND FILE: STEP-BY-STEP GUIDE TO FILING TAX RETURNS
The Form 11 can be made easier and this guide may even save you money, write Colin Forbes and Daryl Hanberry
PREPARING and filing your annual self-assessed tax return can be a daunting task for any taxpayer. Year after year, the Form 11 self-assessed tax return grows longer and more complex, with the 2016 version being 34 pages long with 15 panels and hundreds of data points for the anxious taxpayer to complete. Fear not, our step-by-step guide to completing the Form 11 will make the task easier and may even help you to save some tax along the way.
Not every line of the Form 11 is covered in our guide but we have focused on the main areas that taxpayers have difficulty understanding or where you should be aware of various tax reliefs/ exemptions that you may be entitled to. As always, if you have invested in complex instruments such as foreign life insurance policies or wish to claim property based incentives, you should engage with a professional tax adviser.
PAPER OR ONLINE?
The 2016 self-assessment Pay and File deadline is October 31, 2017, just over a week away. The paper version of the Form 11 can be found on www.revenue.ie.
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If you are running out of time to get your tax affairs in order before this date, you could “pay and file” through the Revenue Commissioners ROS (Revenue Online Service). The deadline is extended until November 14, 2017, if you choose this facility. The second leg of the Ireland v Denmark tie is being played that night so be sure to “pay and file” before kick-off!
As an added incentive, ROS calculates the taxes due for you, as opposed to you crunching the numbers on the paper version.
The following must be completed online on or before this deadline: File the Form 11; Pay any balance of income tax for 2016; Pay your Preliminary Income Tax for 2017.
So if you need to avail of the extended deadline and have not previously registered for ROS services, then you need to act quickly in the next few days.
HOW DO I REGISTER FOR ROS SERVICES?
In order to register for ROS, click on the Register for ROS link on the Revenue Commissioners home page, www.revenue.ie, and follow the below steps: 1 Apply for your ROS Access Number (RAN).
This is the first step in applying to become a ROS customer. Your RAN will be sent out by post to your chosen address. You should allow two or three working days for this to issue. 2 Apply for your Digital Certificate.
You can only complete this step when you have received your RAN by post. Enter the RAN number and complete all relevant sections. A ROS System password will be posted to your chosen address — again you should allow two or three working days for this to issue. 3 Retrieve your Digital Certificate and view your account. Using your ROS System password you can retrieve and download your ROS Digital Certificate. You should name the certificate and allocate a password to the Digital Certificate.
Once you have retrieved your ROS Digital Certificate you can access ROS to file your return, pay your tax and view your account.
There are only 15 working days between today and the November 14 extended deadline, so swift action will be needed by you in the next few days in order to ensure that you can Pay and File on or before November 14, 2017.
If this is your first time filing a self-assessment Form 11 tax return, you will need to make sure you are registered for Income Taxes by following the e-Registration process on the ROS website or by completing the Form TR1, which can be found on www.revenue.ie.
HOW CAN I PAY MY TAX LIABILITY USING THE ROS SERVICES?
The Revenue Commissioners accept the following methods of payment from you: 1 ROS Debit Instruction (RDI): You will only need to do this once and it will allow you to submit a payment immediately. The amount of the payment and when the payment is made will be determined solely by you. 2 Credit card: Payments using your credit card are limited to card providers Visa and Mastercard. If you choose this payment option, you must pay a transaction charge of 1.1pc of the value of the payment. This charge is purely related to third-party fees incurred by the Revenue Commissioners in the provision of the service. 3 Debit card: Currently the Revenue Commissioners absorb the charge for using your debit card, however, this may change in the future.
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Always remember to have funds in the bank account you are using to pay your tax liabilities and ensure that it is a current account in the Single European Payments Area (SEPA), not a deposit account.
WHAT IS PRELIMINARY TAX FOR 2017?
It is essentially a payment-on-account of your 2017 tax liability. If you are a self-assessed taxpayer, the amount of preliminary tax you must pay for 2017 must be equal to or exceed the lower of: 90pc of your final liability for 2017, or 100pc of your final liability for 2016, or 105pc of your final liability for 2015 (only available where preliminary tax is paid by direct debit and does not apply where the tax payable for 2015 year was nil).
WHAT IF I MISS THESE DEADLINES?
If you do not meet the pay-and-file requirements, interest and penalties will be imposed by the Revenue Commissioners.
The good news is that the earlier you file the return after the deadline, the lesser the interest and penalties. If the 2016 return is filed by December 31, 2017, the surcharge penalty is 5pc of your income tax liability for the year, subject to a maximum amount of €12,695. If the return is filed after December 31, 2017, the surcharge penalty is 10pc of your tax liability, subject to a maximum amount of €63,485.
Remember though that the surcharge liability is calculated without credit for preliminary tax paid on account.
Also, in calculating the surcharge, credit is allowed for PAYE tax deducted at source, unless the chargeable person or their spouse/civil partner is a company director.
You can appeal for the late submission surcharge to be reversed, for example in a case where there was a major failure in a computer system or a serious illness.
The interest rate on overdue tax in respect of income tax and capital gains tax is currently 0.0219pc per day and this may be backdated to October 31 in the previous year.
DOES NON-PAYMENT OF LOCAL PROPERTY TAX HAVE AN IMPACT ON MY TAX RETURN?
If you file your Form 11 on time, but at the date of filing, you have failed to:
submit your LPT return (for most LPT taxpayers this should have been submitted in May 2013), or
pay all outstanding LPT liabilities (including the 2017 liability which was due for payment earlier this year), or
enter into an agreed payment arrangement, a LPT surcharge of 10pc will be added to your final tax liability for 2016. Where the LPT is subsequently brought up to date, the amount of the surcharge will be capped at the amount of the LPT liability involved.
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As you can see, it can prove quite costly if your LPT obligations have not been met, so ensure you get your LPT affairs up to date.
I MADE A MISTAKE ON MY TAX RETURN, WHAT CAN I DO TO FIX IT?
If you made a mistake on your tax return and the Revenue Commissioners discover the error during an audit, they can impose penalties even if you try to explain to the Revenue Commissioners that you were unaware of the relevant tax laws. The Revenue Commissioners will classify the mistake as careless behaviour and the level of penalty that would apply will depend on whether the mistake has significant tax consequences.
The penalties could be reduced if you “go on the front foot”, notify the Revenue Commissioners of the errors and fully co-operate with them to work out the additional tax due.
Always consult a professional tax adviser to help you with any complex tax matters.
COULD I BE AUDITED?
Self-assessment Returns are subject to Audit by the Revenue Commissioners. Tax law provides that the Revenue Commissioners may make any inquiries or take such actions as are considered necessary to verify the accuracy of a Return.
Tax law provides for both civil penalties eg (publication in a list of tax defaulters) and
criminal sanctions for: failure to make a return, making of a false return, facilitating the making of a false return, or, claiming tax credits, allowances or reliefs which are not due.
In the event of a criminal prosecution, a person convicted on indictment of an offence may be liable to a fine not exceeding €126,970 and/or to a fine of up to double the difference between the declared tax due and the tax ultimately found to be due and/or to imprisonment.
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You should retain all the paperwork and electronic records relating to your 2016 tax return for six years.
I’M A PAYE WORKER AND HAVE RECEIVED FOR THE FIRST TIME SOME SMALL AMOUNTS OF NON-PAYE INCOME AND I WANT TO CLAIM SOME TAX RELIEFS — DO I REALLY NEED TO COMPLETE THE FORM 11?
If you had a PAYE source of income and your net assessable non-PAYE income was less than €5,000 in 2016, and this income was coded against your PAYE tax credits or fully taxed at source, you are not regarded as a self-assessed taxpayer (known as a chargeable person) for 2016 (provided your gross non-PAYE income before expenses does not exceed €30,000).
This means that you would not need to complete the Form 11. You should instead file the shorter Form 12 (half the length of the Form 11) which allows you to report your income and claim tax credits, allowances and reliefs for 2016.
You can fill out a paper Form 12 which can be found at www.revenue.ie.
Alternatively, you can complete the eForm12 — this electronic form is available through the Revenue Commissioners myAccount service — as it is much easier to complete than the paper version.
The eForm 12 does not provide for returning Capital Gains Tax details. You must fill out a separate Capital Gains Tax return called the Form CG1 in this case which is also available on www.revenue.ie.