Get the latest update from Revenue. Newsflash. Find out their focus areas so they can take more money out of your pocket. As an organisation, they are brilliant at what they do. Collecting taxes is the game and we are all saints and sinners in the match. The saints are the good lads who pay what they owe when they owe it. Revenue are working hard to move the sinners toward sainthood. They’ll pay what they owe, and more, on the road to redemption. I’ll look at a few areas as follows
- Debt Warehousing Scheme
- Tax Clearance
- Enhanced Reporting Requirements
- Tax return season
- Summary
Debt Warehousing Scheme
This scheme, introduced in the Covid years, helped businesses warehouse VAT & PAYE. There was 0% interest up to the end of 2022 and 3% from 1 January 2023. Up to the 1st of May 2024, those with warehoused tax debt had two options. Pay the taxes owed or enter into a Phased Payment Arrangement [PPA]. The carrot for those entering a PPA before 1 May was a 0% interest rate. The stick for not meeting that deadline was standard interest rates of 8% or 10%. Plus, normal debt collection and enforcement rules are on top of that.
So, if you were organised you got the 0% interest rate and saved yourself money and hassle from Revenue. And if you weren’t then you have Revenue on the phone, sheriffs, and paying more than you should have. The scheme was a huge help to businesses. In December 2021 there was over €3 billion owed. By May 2024 Revenue notes that “the balance of pursuable arrears is €100 million”. I take that number as the amount owed by those who didn’t meet the 1 May deadline to either pay or enter into a PPA.
The 1 May deadline was a major success for Revenue. A surge in PPA applications and approvals happened from 1 January 2024. On that date, there were only 2,116 PPAs in place covering tax debt of €158 million. At the end of last August, there are 12,436 PPAs in place covering debt of €1.21 billion.
Non-engagers landscape
In August 2024 there was €89 million owed by 4,750 businesses with a small number of high-value debt cases. Revenue pursue a range of measures to collect this debt including
- Full payment
- PPAs at standard interest rates
- Enforcement
- Ceased businesses
- Attachment, liquidations, etc
- Restructuring
Key Condition
The key condition to keep the 0% interest rate is filing returns and paying current taxes on time. If you don’t the threat is normal collection proceedings from Revenue plus up to 10% interest. Say you owe €100,000 that would be interest of €10,000 and Revenue looking for you to pay the €100,000 too. This brings us nicely along to the next topic, Tax Clearance.
Tax Clearance
Tax clearance interlinks with the Debt Warehousing Scheme. It highlights the importance of having it for that scheme alone. Revenue cancel tax clearance if there are tax compliance issues. It happened to our client recently. Paul had his tax clearance cancelled because of a non-payment of Local Property Tax. Dee got onto him and he sorted it and we reapplied and tax clearance was issued again. The lesson is something small like that could be very costly.
Revenue confirmed that to August 2024 they approved 155,000 tax clearance applications. There is a periodic review every 3 months. On Revenue’s to-do list is to give advance notice of the expiry of tax clearance. This would be very welcome for taxpayers and their agents.
Enhanced Reporting Requirements [ERR]
Since 1 January 2024, there are 41,797 employers reporting benefits of close to €1 billion for 665,437 employees. For ERR the reportable benefits include
- Small benefit exemption
- Remote working daily allowance
- Travel [vouched and unvouched]
- Subsistence [vouched and unvouched]
- Country money for site-based employees
The key for the employer is to report these on or before you make the payment. As usual, where an employer fails to do so they are open to penalties per the tax legislation.
Revenue has taken a “service for compliance” or softly softly approach this year to bed down the new rules. But the gloves are off come 1 January 2025.
“ERR however will form part of employer interventions post January 2025. ERR behaviour is an important risk indicator in relation to employer PREM behaviours and will be used to drive case selection for PREM interventions.”
So, there you have it. If you get a PREM [PAYE] review post 1 Jan 2025 it will be very likely as a result of your ERR reporting or lack of. See ten tips to help you with ERR reporting.
Risk Areas
I wrote about a case where a taxpayer appealed a Revenue assessment about travel expenses. The lack of proper records did for the taxpayer in the end. Having the correct backup to an expense claim is key before you pay it and that comes to your own expenses too.
The whole payroll area is fraught with danger and those who don’t have the expertise will get caught out. There’s a lot of uncertainty about small benefits. Based on their guidance Revenue are taking a very petty approach to the value of a benefit. An Easter Egg is a benefit that should be reported, for example!
Other areas of uncertainty include your normal place of work. Company directors also need to be mindful of large expense payments in company accounts. These payments in their 2024 accounts will be open to more Revenue scrutiny. Does the value in the company accounts match what you reported to Revenue via payroll? Outsourcing your payroll function could be an option for you and if it is, come talk to us.
Tax Return Season
We are in the thick of tax return season. The Corporation tax deadline for companies with 31 December year ends was the 23rd of September. Now there is an impending Income Tax, Capital Gains Tax, and Inheritance/Gift Tax deadline. The date is the 31st of October next. There is an extension to Thursday the 14th of November when you both pay and file using ROS. This 31st of October deadline is for
- Income Tax returns for 2023
- Capital Gains Tax returns for assets disposed of in 2023
- CAT return for gifts or inheritances received in the year from 1 September 2023 to 31 August 2024
Revenue outlined some useful tips to help you meet the deadlines and I will divide these into two. What taxpayers can do and what agents can do
What taxpayers can do?
Apart from engaging as soon as possible with your tax adviser other useful tips include
- Make sure your Local property tax returns and payments are up to date
- If you let a residential property last year, and you have a mortgage on the property, make sure the tenancy is registered with the RTB
- If you or your spouse is a company director who owns 15% or more of a company don’t miss the deadline. The surcharge is more penal for you as it applies to your tax liability before PAYE is deducted.
- The mortgage interest credit is a new tax credit for 2023. If you paid more mortgage interest on your home mortgage in 2023 compared to 2022 then you can get this. But make sure you have all the relevant information for your adviser
- If you had an Ulster bank account, you would have opened another current account. Again, check that your adviser has your new bank details so you can pay Revenue on time.
- Any pension payments you make this year that you want to backdate to 2023 must be made and claimed before the due date.
- If filing your own tax return, ensure you can access ROS
Tips for Tax Agents
For us tax agents the most important this is to have all the client tax information before the deadline. If you the client haven’t been in contact, then you need to get the finger out. Fill in your tax checklist and get the supporting documentation to us asap. Key issues for tax agents include
- Client is on your client list as this can take 2 to 3 days to set up
- We are familiar with the Return Preparation Facility [RPF] as ROS offline isn’t available
- Save the work we have done on the RPF in the right place
- We have the correct bank current account details for the client to make the tax payments or refunds
- Claim medical expenses already claimed under real-time credits on the Revenue receipts tracker
- Write to clients confirming the liabilities owed and dates for payment
- Get the client to sign their tax return
- Claim taxes already paid to Revenue such as professional services withholding tax, non-resident landlord withholding tax, and RCT.
- Focus on your company director clients so they can avoid more penal surcharges.
- Set due dates to receive information from your clients. If they don’t give you the information on time, you cannot file the return on time.
Summary
There are many other areas of compliance that the various Revenue divisions focus on. The purpose of this blog isn’t to frighten the life out of you, so you hide under the covers for the weekend. But it does highlight the huge value of tax compliance. Taxes are low for companies but high for company directors and employees. The more you earn the more you pay. But why pay more than you should and have the added head wreck of Revenue on your tail? Make sure you and your company are well looked after by getting the numbers right and the returns in on time.
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