What Revenue fines and penalties are there?
The Revenue Commissioners can impose various levels of fines and penalties for the incorrect or fraudulent use of the Irish tax system.
The main penalties being imposed are for:
- Late submission of tax returns
- Non filing of tax returns
- Errors or fraudulent declarations on tax returns
- Late payment of taxes due.
The level of neglect or misconduct determines the penalty that will apply. For example in a Revenue Audit case the lowest penalty that Revenue can impose is 3% but the highest penalty is 100% of the tax liability.
The interest rate on overdue tax in respect of income tax, corporation tax, capital gains tax, gift and inheritance tax is currently 0.0219% per day.
The interest rate on overdue tax in respect of indirect taxes, such as VAT and PAYE is currently 0.0274% per day.
What if I am late filing my tax returns or making tax payments?
Where a return of income or corporation tax return is delivered less than two months after the return filing date, the late submission surcharge is 5% of the tax liability, subject to a maximum surcharge of €12,695.
Where a return of income or corporation tax return is delivered two months or more after the return filing date the late submission surcharge is 10% of the tax liability, subject to a maximum surcharge of €63,485.
Revenue can impose interest on the late payment of the tax liability at the rates outlined above.
The taxpayer 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.
What happens if I make an error on my tax returns?
Firstly if you are unsure of any tax laws or regulations you should contact an accountant.
If you make a mistake on your tax returns Revenue can impose penalties.
If you understate income on your tax returns you can be penalised even if your excuse is that you were unaware of the relevant tax laws. Ignorance of the law is no excuse. This is known 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 notify Revenue of the errors, cooperating and assisting them to work out the additional tax due.
Who is responsible for my tax returns – my accountant or myself?
You are responsible for all tax returns, calculations and making payments even if you use an accountant. However a good accountant should get it right for you. If not change accountants.