Complete Noob to Self-Assessment

K-Fella

Hi,

I'm new to the whole self-assessment situation and haven't a clue what to do as far as pay and file is concerned.

I've got my login details for ROS but am stumped with the process. I only started my business in June of this year and have no clue what to enter in FORM 11 - 2009.

I have the pdf guide open and am trying to make some sense of it.

Am I only concerned with the part "pay your Preliminary Income Tax for 2010."? If so, what do I need to take into account?

• Money earned between June and Oct?
• Expected earnings between June and Dec?
• Something else?

I need to submit this before 31st, right?

Please advise

L_Bonn

I think you have 2 additional weeks when doing it online.

Im asking the same kind of questions as you on here and wondering should I use an accountant. Also you may need to check out whether you need to do anything at all this year with the preliminary tax.

GeorgeTaylor

You only commenced as a self assessed in June of this year (and registered for tax)? So you were PAYE last year with no other income? If yes, then you don't need to lodge a tax return before the 31st. You're also not required to pay prelim tax but, see this thread as to why you might pay some http://www.boards.ie/vbulletin/showthread.php?threadid=2056071096

K-Fella

GeorgeTaylor wrote: »

You only commenced as a self assessed in June of this year (and registered for tax)?

Yes.

GeorgeTaylor wrote: »

So you were PAYE last year with no other income?

I was on Jobseeker's Benefit beforehand.

GeorgeTaylor wrote: »

If yes, then you don't need to lodge a tax return before the 31st. You're also not required to pay prelim tax but, see this thread as to why you might pay some http://www.boards.ie/vbulletin/showthread.php?threadid=2056071096

If I don't need to pay prelim tax, I would prefer not to.

seamus

Here's a question that the revenue website can't help with (and is kind of related).

You need to file your income tax returns for 2009 by the 31st October 2010. At that stage are you required to pay your preliminary tax for 2010 or can you leave it until October 2011?

The revenue website nor any of the forms are very clear on whether preliminary returns are optional. They appear to claim that it is required, without saying otherwise.

nompere

At the same time as filing your tax return for 2009 and paying any balance of tax for 2009 you must also pay preliminary tax for 2010.

How much preliminary tax you pay is up to you, but if it doesn't meet the rules then this time next year Revenue will charge you interest on the underpayment. Revenue charge interest at a rate which is in the region of 10%, and it's not allowable as a business expense unlike interest paid to your local friendly bank.

If you pay 100% of this year's tax liability as preliminary tax for 2010 then no matter how much you have underpaid there will be no question of interest on the underpayment.

The alternative is to pay an amount that ends up as being at least 90% of your 2010 liability. How good are you at forecasting how much income you will have for the rest of this year?

So stating how much preliminary tax you propose to pay is mandatory, but how much you do pay is your decision.

seamus

Still not 100% clear on that. Your last line there - basically you can tell Revenue that, "I reckon my liability this year will be €10k, but I'm not going to pay that till next september"?

GeorgeTaylor

You are obliged to pay the lesser of 100% of last year's (2009) tax or 90% of this year's as a prelim payment. As you only registered in 2010, 100% of last year's is zero so the minimum you can pay is zero.But again, you might be better paying something so that you've less to pay next year.

To answer your last post, if you do have a liability to prelim tax but can't pay it, you should still inform them of the amount in the Statement of Liabilities slip.

seamus

Ah right, I see. Assuming that someone has been previously filing income tax for the last two years (2007/2008) and not been declaring nor paying preliminary tax in those returns, they are required to submit a return for last year (2009), as well as an estimate for this year?

If you pay the lesser of the two amounts, which may be your 90% of 2010, then what happens to your 2009 tax liability? Is this amount offset against your 2009 tax liability and then you pay the balance of 2009/2010 in Oct 2011?

GeorgeTaylor

Not quite, every October you are obliged to lodge your tax return for last year, pay the balance owed of that return (if any), and make a preliminary payment towards the current year. As this is your first year (2010), you don't need to lodge a return for 2009 but need to consider a payment for 2010 but this may be zero as explained previously.

This time next year, you will have to lodge your 2010 return, pay the entire 2010 liability if you haven't paid anything this month and make a preliminary payment towards 2011 which will be either the entire 2010 liability or 90% of the 2011 liability.

Hope that makes sense.

nompere

GeorgeTaylor wrote: »

and make a preliminary payment towards 2011 which will be either the entire 2010 liability or 90% of the 2011 liability.

Hope that makes sense.

Sorry - this just isn't true.

The amount of preliminary tax a person pays is entirely their decision, and it doesn't have to be related to either the total liability of the previous year or 90% of the current year liability.

If the amount that is paid doesn't fit one of those two tests then Revenue will charge interest on the underpayment, so there's no doubt that it is advisable to pay one of those of amounts, but there's nothing mandatory about it.

If Seamus wants to pay nothing that's his decision. If he advises Revenue that he will pay €10,000 then Revenue will enforce collection of that amount.

GeorgeTaylor

I don't disagree with that, you can insert "to avoid any possible interest charges" in the appropriate points above.

K-Fella

So it's my decision as to whether or not I want to pay prelim tax for 2010? If I decide not to, do I have to file any return at all?

ebbsy

Get an accountant, before you do something that raises a red flag somewhere.