New Revenue Guide to eTax Clearance System

July 22, 2016

Last December, the Revenue Commissioners unveiled their new eTax Clearance system.

This new system enables (almost) all tax clearance applications to be processed online. For most of us, paper tax clearance certificates are now a thing of the past.

Instead a special code, known as a Tax Clearance Access Number, now issues to each successful applicant. They can then give this number, along with their PPSN/tax reference number, to a third party to verify their tax clearance status online.Tax Clearance SuccessIt’s important to note that your tax clearance certificate can be withdrawn without notice unless you remain tax-compliant and when you again become compliant, you’ll need to make a fresh application.

Revenue have now updated their FAQs (frequently asked questions) on how the new system works.

If you’re a PAYE taxpayer, you should use the myAccount service to apply for tax clearance.

If you’re self-employed or run a company, you can use ROS.

You’ll first need to register for myAccount or ROS.

If you’ve no computer or web access, you can still apply by completing a paper form TC1 and posting this to your local tax office or the Collector General’s office in Limerick.   You can also use this paper form if you’re a non-resident or representing an unregistered voluntary body.

Revenue To Enforce VAT Return Of Trading Details

July 29, 2013

Revenue are planning to withhold tax repayments and Tax Clearance Certs from VAT-registered businesses, who fail to submit an obscure statistical return of VAT sales and purchases.

The VAT ‘Return of Trading Details’, or RTD, is a mandatory form which requires each business to record their annual aggregate sales and purchases totals for each VAT rate.

VAT Return of Trading Details

The RTD was introduced in the early 1990s as part of the reforms to the VAT system following the adoption of the EU Single European market in 1992.

In those days, it was regarded as a very important form, as it enabled Revenue to monitor business sales and purchases for audit purposes, and compare  respective totals against the corresponding figures in business accounts.

However, the RTD seemed to fall into disfavour about 15 years ago, with dwindling numbers of businesses bothering to file it each year subsequently.

This non-compliance never seemed to bother Revenue too much, and it became increasingly rare for Revenue demand completion and submission of RTD’s, or to refer to RTD’s in official correspondence.

This has all changed with today’s Revenue eBrief, unveiling new plans to enforce RTD completion and filing.  This includes a new, “simplified” RTD, to be launched in late 2013, with local tax districts enforcing full compliance with RTD requirements from  1 September 2013.

Revenue state that, from that date, “taxpayers who are seeking repayments or refunds of tax may be requested by their local Revenue District to submit outstanding RTD forms in order for such repayments or refunds to issue.”

Time to get filing!

Time to Scrap Tax Clearance Certs?

June 26, 2013

Revenue have this morning confirmed that from next Monday, 1 July, Tax Clearance Certs will not issue to taxpayers who have failed to pay the 2012 Household Charge.

From next Monday, all unpaid Household Charge bills become Local Property Tax (LPT) liabilities and are then collectable by Revenue.

While we can’t blame Revenue for doing all they can to collect outstanding Household Charge and LPT bills, its unfortunate that the conditions for obtaining a Tax Clearance Cert are becoming more and more onerous and bureaucratic – so much so that their original function has been almost forgotten.

Time to Scrap Tax Clearance Certs?

Tax Clearance Certs were introduced in the 1980s as a measure to combat blatant and widespread tax evasion. In those days, it was common practice for individuals and firms to dodge tax on State contracts and income.

The requirement to produce a Tax Clearance Cert quickly forced these cowboy operators to clean up their act. It was very successful in doing so and helped greatly in cleaning up tax evasion in that era.

However we have since learned that having a certificate is no guarantee of tax compliance and probity.

Successive high-profile scandals exposed countless politicians and business people who had blatantly evaded tax while holding tax clearance certs.

Indeed ex-TD Michael Collins was prosecuted and found guilty of obtaining a tax clearance certificate under false pretences, by falsely claiming to be tax compliant.

Mr Collins had in the meantime admitted to owning a bogus non-resident account, and later made a substantial tax arrears settlement with Revenue.

The Collins case demonstrates the futility of using tax clearance certs as a tool to combat wilful evasion. In fact they have become little more than a bureaucratic box-ticking exercise.

If your tax record is clear on a specific day, your certificate will issue. On the other hand, a tiny residual tax balance, an unpaid Household Charge bill, or a mislaid tax return will block its granting.

There is no allowance for materiality or overall compliance. And no sanction for persistent late filing of VAT, PAYE/PRSI or Income Tax returns, once the wrongdoer can contrive to regularise their tax position in the nick of time to ensure their certificate is renewed.

Worse still, those remaining cowboys who nowadays abuse the tax system, in a far more sophisticated and elaborate manner than their 1980s counterparts, still find the tax clearance cert system only a minor obstacle to their crimes.

I believe that the time has come to rethink the whole logic behind tax clearance certs, and devise a better system to police and reward tax compliance.

Todays’s Revenue eBrief is here.

The Local Property Tax: How Will It Work?

March 8, 2013

Here are the key features of the Local Property Tax (LPT), as outlined by Revenue Chairman Josephine Feehily yesterday:

The LPT Basics

The Local Property Tax is a self-assessed tax. The charge for 2013 is based on each property’s market value on 1 May this year.

Property values are arranged into bands – from €0 to €100,000 and then in €50,000 bands.

Your tax liability is calculated at 0.18% of the mid-point of the relevant band,  eg on a property valued between €200,000 & €250,000, the charge will be €225,000 * 0.18% = €405.

Local Property Tax LPT

50% of this sum is payable this year. The full amount will be payable each year from 2014 onwards.

The 1 May 2013 valuation will apply up to and including 2016. This will hold regardless of improvements, extensions, repairs or property market movements in the meantime.

The Local Property Tax Register

Revenue have compiled a register of residential properties and their owners. They freely acknowledge that this will inevitably contain errors.

Individuals who receive letters in error should contact Revenue immediately so they can correct the register. If no contact is made, further letters, and enforcement, will issue.

Property Valuation

It is up to the property owner to decide the market value of their property.

Revenue suggest that each property owner can assess their property’s value by using the official Property Price Register, or by accessing data from local estate agents etc.

They will also publish an online interactive guide providing indicative property values for different property types e.g. detached, semi-detached, apartment, etc. based on the age of the property, and average prices in each Electoral District.

However if a property has unique features, ie , is smaller or larger than average, is in a poor state of repair or has exceptional features, these should be considered in assessing its value.

Submitting the LPT Return

LPT returns can be completed and submitted online or on paper. The deadline for paper returns is 7 May and for electronic returns is 28 May.

If you own multiple residential properties, or if you are already obliged to file your tax returns online,  you must file your LPT return online.

Paying the LPT

The following payment options are available:

  • Single Debit Authority; (debited on 21 July)
  • Deduction at source from a salary or occupational pension;
  • Deduction at source from  Department of Social Protection or Department of Agriculture payments.
  • Direct Debit (debited from 15 July)
  • Debit/Credit Card online;
  • Cash payments and over the counter Debit/Credit Card payments via An Post, Payzone or Omnivend.

The Revenue Estimate

Every property owner will receive a Revenue Estimate. This is the amount Revenue will collect if no LPT return is filed. However, the  valuation remains the sole responsibility of the property owner. Once you file an LPT return, the Revenue estimate becomes irrelevant.

What will happen non-filers?

Revenue will pursue non-filers to collect the Revenue Estimate.

Self-assessed taxpayers who haven’t filed their LPT Return will also incur an automatic late filing surcharge on their income tax return. This means their income tax liability will increase by a further 5%-10% of their liability.

It will also be impossible to receive a tax clearance certificate if your LPT Return and payment are overdue.

For more…

For more information, you can refer to the Revenue Local Property Tax Guide  and Frequently Asked Questions

Local Citizens Information Centres can also advise on the tax, or you can  contact Revenue’s LPT Helpline on 01 7023050 (or the more expensive 1890 200 255). Aertel page 593 also outlines information on the Local Property Tax.

Yesterday’s Local Property Tax Statement by Revenue Chairman Josephine Feehily is here.

Need a Tax Clearance Certificate? Why not apply online?

January 29, 2010

Did you know that you can apply online for a Tax Clearance Certificate?

In my experience, this is the easiest and fastest way to receive a Tax Clearance Certificate.

If your tax affairs are up to date, you should normally expect to receive your Certificate by post, within a week or so. Otherwise you will receive a letter from Revenue listing any outstanding balances or returns.  Once you resolve these, your Certificate can then be issued.

This online service does not apply to PAYE taxpayers, Irish non-residents,  or Standards In Public Office (SIPO) applicants.

If you are in one of these categories, just complete the paper form and submit it to your local Revenue Office.