Revenue Powers to Estimate PAYE Due from Employers

Posted in Income Tax, Newsletter, PAYE/PRSI

If the Revenue has reason to believe that an employer has understated or not declared PAYE then they have the power to make estimates of the tax due. These can be monthly or yearly estimates.

When Would The Revenue Decide To Issue An Estimate?

Generally speaking the Revenue can do so if it has any reason to believe that the total amount of tax that an employer is liable to remit under the PAYE regulations is greater than the amount actually remitted.

In practice this usually boils down to 2 scenarios:

  1. The employer has failed to submit its monthly return (P30) or its annual return (P35) properly.
  2. A Revenue audit is completed with no agreement as to the amount of PAYE income tax/PRSI/USC or LPT.

What Can An Employer Do If A Monthly Estimate Is Issued?

If an employer considers that it is not liable to PAYE for the month as estimated by the Revenue then an objection claim can be made in writing so that the Appeal Commissioners will consider the objection. The claim must be made within 14 days from being served with the estimate notice. The decision of the Appeal Commissioners is final.

If the estimate has been raised because of a failure to submit the P30 then the employer can submit this and pay the tax due. The estimate would then be considered discharged. However, once the Revenue has started recovery proceedings for the estimate then these will usually be followed through to completion regardless of a P30 being submitted.

What Can An Employer Do If A Yearly Estimate Is Issued?

If an employer has not submitted their P35 then if this is submitted within 14 days of being served with the estimate and any amounts due (including interest and costs) are paid, then the estimate will be discharged.

If this is not done then the estimate becomes enforceable without any further appeal procedures.

However there is a slight difference where an employer has submitted the P35, but the Revenue consider the tax to be understated and so raise an estimate. In this case the employer has the right to appeal the estimate as being excessive. The appeal must be made within 30 days from being served with the estimate notice.

It is worth noting that where the employer pays the estimate, but still does not submit the P35, then the Revenue can increase the estimate.

How Can An Employer Avoid Receiving Estimates?

A significant trigger for estimates is an employer failing to submit the appropriate returns. Therefore it is key for employers to ensure that systems are in place to ensure that returns are not missed and are submitted in good time.

Clearly it is also important to hold and maintain accurate payroll records. If for some reason a monthly or annual period shows a significant difference to the tax normally due, it may be advantageous to disclose this to the Revenue at the time of submitting the return.

At Parfrey Murphy we have considerable experience in running a payroll that meets the Revenue’s requirements. So if payroll is causing you headaches why not give us a call and see how we can help you.

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