Self-assessed taxpayers need to sort out affairs as deadline looms

There's nothing like a looming, non-negotiable deadline to push people into sorting out unpleasant affairs - like income tax. Or as the Revenue Commissioners bluntly put it: "Pay and file now to avoid a surcharge, interest, penalties and the increased risk of a tax audit."

The deadline for filing paper tax returns documenting income from 2004 is now just 10 days away (and only six of them working days). By October 31st, self-assessed taxpayers must file the 2004 return, pay the balance of their tax liability for that year and pay preliminary income tax for 2005.

And just to compound taxpayers' seasonal horror, Halloween is also the deadline for paying capital gains tax (CGT) on any profit derived from assets between January 1st and September 30th of this year.

Ideally, self-assessed taxpayers should have started collating crumpled receipts and researching all possible tax-efficient pension contributions they could make long before now.

But anyone who is a little behind schedule can relax in the knowledge that the Revenue's now traditional extension for users of its online service, www. ros.ie, gives them until November 17th to pay and file.

Taxpayers - or their accountants - must register at www.ros.ie. This process involves the Revenue posting out a Revenue online service (ROS) Access Number (RAN), which taxpayers then use in conjunction with their Revenue registration number to apply for a digital certificate.

The Revenue then posts registered customers a password, which they can use to retrieve their digital certificate. This digital certificate should be installed on the user's computer.

As these security precautions involve dealing with the postal service twice, taxpayers should avoid leaving it until the last minute to start the registration process, especially as the Revenue's systems tend to backup at this time of year. The Irish Taxation Institute has reported delays in getting through to officials when queries about the service arise.

Those who filed online last year won't have received a paper return and a reminder this year. Instead, they will receive an electronic reminder in their ROS inbox to file again this year, according to Richard Bowden, director of the Irish Taxation Institute.

When ROS customers file online, they should receive a paper-based statement of their net tax liability with a payslip.

"If you wish, you can post in the payslip with a cheque to the collector general's office in Limerick," says Bowden.

"Alternatively, you can make your payment online via ROS by using your laser card, credit card or a once-off debit instruction where the required payment will be taken from a specified bank account."

Self-assessed taxpayers who have stuck resolutely with the paper system will have been sent the 22-page Form 11 tax return with their name and PPS number on it, and they are required to file this return.

Even if they are not sent a personalised paper return, chargeable people are obliged to get a blank return or file via ROS.

The penalties for not filing, or for underpaying liabilities, are significant.

If the return is up to two months late, the surcharge is 5 per cent of the individual's tax liability. Two months after the filing deadline, the surcharge doubles to 10 per cent. Eventually, chargeable people who fail to file a return and pay their tax bill may be prosecuted for tax evasion, adding a court appearance and legal costs to their woes.

If their liabilities exceed €30,000 they will have their names published in the tax defaulters' list, which appears in the quarterly Government publication, Iris Oifigiúil, and is reprinted in The Irish Times.

If taxpayers underpay their tax, they are hit with an interest rate of 10-12 per cent per annum. However, if they overpay their tax, the rate of interest the Revenue pays is just 4 per cent and the interest clock doesn't start running until six months after they receive the claim.

So who exactly needs to file a tax return?

According to Billy Burke, associate tax director with KPMG, the spectrum of individuals who need to pay and file is broader than many people assume.

It is not only self-employed people, including farmers, publicans, solicitors and retailers, who are obliged to file a return but any person in receipt of income where some or all of the tax on that income is not collected through the PAYE system.

Non-PAYE income might include investment income such as dividends and deposit interest retention tax (Dirt), rental income, foreign employment income, foreign pensions, profits arising from the exercise of share options and maintenance payments from a separated spouse.

Moreover, holders of foreign bank accounts, investments in an offshore fund or life assurance policy, company directors and people who have realised capital gains are also obliged to file a return.

For more information on tax liabilities and claiming tax reliefs, visit www.revenue.ie.