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Serious risk of Tax Default in October

  • 13-05-2009 12:04am
    #1
    Closed Accounts Posts: 16


    Hi Folks.
    Relatively new to this so bear with me.
    Been self employed for past 18 months. Had reasonably successful year last year, but like an absolute g0bsh1te didnt set aside money for tax as i should have. I used the excess money to pay off old loans, took a holiday (Spain using Ryanair flights, budget apts), bought a new car (second hand), lived a moderate life - didnt go mad but just thought that things were going to go the same way this year financially and that i would be able to get back on top of things in time for October.
    Although now recession has hit big time - earnings less than half of what they were. Barely enough coming in now to cover outgoings. Defaulting on loans, bills etc.
    The realisation is dawning on me now that I just aint going to be able to pay the tax man what I owe in Oct for last year let alone any prelim for this year.
    Any advice - I dont really fancy spending xmas in the slammer. Whats the worst that can happen, what kind of penalties am i likely to be hit with??
    Any help or advice would be much appreciated.


Comments

  • Registered Users, Registered Users 2 Posts: 380 ✭✭Past30Now


    Hi R169

    Two quick points

    1 - Based on you description of the current year you may have a very small preliminary tax liability for 2009. Make sure to tell your accountant that you will pay your preliminary tax on the basis of 90% of the actual liability as opposed to 100% of the prior year liability plus an adjustment for the income levy.

    2 - Get your books and records completed for your first year quickly so that you can find out exactly what you owe. If at that point you are certain that you will be unable to pay the tax in October, get in contact with Revenue, file the return and enter into some form of arrangement with Revenue to pay the liability over an extended period of time.

    In your OP you stated that you had been trading for 18 months. Did this start in 2007? Did you file a return last year for 2007 and pay preliminary tax for 2008? Assuming you commenced trading in early 2008 your liability for 2008 will be based on your profits for your trading in 2008. Your liability for 2009 may be based on your first 12 months trading, i.e. your 2008 and 2009 liabilities may be both based on the "good" trading year. Discuss the start up rules with your accountant.

    The main point is to go to your accountant quickly and give you both time to do some planning regarding the liabilities.

    Regards,

    Past30


  • Registered Users, Registered Users 2 Posts: 9,798 ✭✭✭Mr. Incognito


    There are provisions to make monthly payments- go speak to a professional.

    If you are looking for what penalties you could be liable to - there is a surcharge for late returns, a daily rate of interest for overdue payments etc. You should be able to avoid all that with timely intervention.


  • Closed Accounts Posts: 1,106 ✭✭✭MoominPapa


    You don't mention whether you have an accountant or not. If not get one. A return should cost you less than 2 grand, all of which you can write off. They will be able to advise you on how to handle the revenue, they can act on your behalf and they will be able to find ways to legitimately reduce you tax liability that you would never know about or have the time to figure out. Like in all professions there are some right dodgy feckers, I've had a couple, but the guy I've been with for years now is dead straight and has saved me many a sleepless night. Talk to people you know who are in business/ self employed and go with one of their accounts who comes highly recommended


  • Closed Accounts Posts: 16 R169


    Past30Now wrote: »
    Hi R169

    Two quick points

    1 - Based on you description of the current year you may have a very small preliminary tax liability for 2009. Make sure to tell your accountant that you will pay your preliminary tax on the basis of 90% of the actual liability as opposed to 100% of the prior year liability plus an adjustment for the income levy.

    2 - Get your books and records completed for your first year quickly so that you can find out exactly what you owe. If at that point you are certain that you will be unable to pay the tax in October, get in contact with Revenue, file the return and enter into some form of arrangement with Revenue to pay the liability over an extended period of time.

    In your OP you stated that you had been trading for 18 months. Did this start in 2007? Did you file a return last year for 2007 and pay preliminary tax for 2008? Assuming you commenced trading in early 2008 your liability for 2008 will be based on your profits for your trading in 2008. Your liability for 2009 may be based on your first 12 months trading, i.e. your 2008 and 2009 liabilities may be both based on the "good" trading year. Discuss the start up rules with your accountant.

    The main point is to go to your accountant quickly and give you both time to do some planning regarding the liabilities.

    Regards,

    Past30

    Thanks everyone for the response.

    I started in Oct 07 so i only had a small Tax outlay for 07 and the prelim for 08 I just paid 100% of the 07 outlay. i used Paylesstax.ie last year and was planning on doing the same again this year. My tax situation isnt all that complicated - its a 100% commission based sales job that im in so there is no vat or employees etc to worry about. Its just wages coming in less the expenses. €2k for an accountant to do this seemed a bit steep.

    I know im fully at fault here and all this could easily have been avoided by paying a monthly contribution or just being a bit more sensible with my money. Didnt see this recession coming at all and just assumed that the good times would continue and the income level would stay roughly the same.

    What do people think of the Paylesstax website - i found them very helpful last year.


  • Closed Accounts Posts: 28 speakswan


    Hi
    A website is good when everything is running smoothy but if you have a problem there is no substitute for meeting some one and discussing it directly with them, even if all they tell you, is everything is fine and the problem is not as big as you imagined.

    My advice is ring them, ask them can you meet to discuss your problem, while in the meeting ask for a price for the job. If they can't meet you then I guess all their tax experts are based in Bulgaria/India and would you really trust them with all your personal information?

    Otherwise I would ask friend to recommend an accountant.

    Regards,
    Speakswan


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  • Registered Users, Registered Users 2 Posts: 6,344 ✭✭✭Thoie


    To be honest, the Revenue have improved beyond recognition in the last 15 years - if your accounts are that simple, I'd just take some time to call in and sit down with them and go through all the paperwork and see what they say.


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