penalty for late tax return

maireadH

We (husband and I) filed tax returns this year for the last 5 years. We expected to get a refund but were shocked to discover that we own them 8.5k! My husband is a proprietary director for a company from which he receives NO income and he has been fined for filing a late return. The fine seems to be based on all our PAYE income, rather than the company income. We receive no income other than that which we get from our normal PAYE jobs. What are our chances of successfully appealing this? It seems a bit unfair that someone receiving no income should be fined in this way (and yes, I know Revenue isn't about "fair")

dbran

Hi

Write them a letter explaining the situation as you have done here.

Also stress that it is the only time you have been late and that you have been otherwise compliant and ask that the surcharge is waived on this occasion. I think in this day and age you will stand a good chance of some success.

Best of luck.

Regards


dbran

maireadH

Thank you. We'll try that. It just seems a bit severe given that there was no income on the directorship and we had fully paid all our tax (not that we had any choice being PAYE!)

Corkbah

maireadH wrote: »

We (husband and I) filed tax returns this year for the last 5 years. We expected to get a refund but were shocked to discover that we own them 8.5k! My husband is a proprietary director for a company from which he receives NO income and he has been fined for filing a late return. The fine seems to be based on all our PAYE income, rather than the company income. We receive no income other than that which we get from our normal PAYE jobs. What are our chances of successfully appealing this? It seems a bit unfair that someone receiving no income should be fined in this way (and yes, I know Revenue isn't about "fair")

let me get this right …. after 5yrs of directorship you (your husband) filed returns, are you personally being fined or is the company being fined ?

1. I would agree with Revenue adding penalty/fines/interest for non-filing of returns for a period of 5yrs….if everyone went by the rules it would not cost the rest of the country money in increased taxes.
2. did the company not operate at all or was your husband simply a director in name (if so, directors have responsibility and what about the other directors …where are they)
3. have you any proof that the company didn't trade or pay your husband ?

While I do have sympathy for you - why did your husband take on the role of a director if he was not getting something in return ? did he fully understand the role of a director ? did he understand the responsibilities of a director ?

I'm assuming this is a Ltd company - registered and "operating" for 5yrs and not filing returns - at least this is what the Revenue will be looking at - what has this company been doing if it is not making money ? and if it is making money …. why are Revenue not getting any of it ?

maireadH

The company filed tax returns each year and is completely up to date and has been each year. I absolutely agree with you with regards the company returns and penalties. However, that is not the case here. There was no tax liability either on the part of the company or ourselves. I guess proof of non-payment from the company to my husband would be in the accounts submitted to revenue each year.

This is my husband's personal tax return. We are being fined personally for not submitting on time. We are PAYE workers so are fully compliant in terms of tax payments. It was an oversight on our part. PAYE workers do not have to file annual returns and as there was no income from the directorship and our only income is PAYE income, we erroneously presumed that we came under this category. We filed this year in order to claim back medical expenses from the last few years.

I don't want to go into the reasons for my husband taking on the directorship but he knew at the time there would be nothing in it for him financially.

dbran

Hi Op

Sorry I misread your post and I did not realise that it was the previous 5 years returns that were also late. I assumed it was just the current one.

That said, you should still appeal it on the grounds that you did not know that you were required to file a personal return and you assumed that as all your income tax was paid by PAYE you believed you were otherwise compliant.

Corkbah, I think you are being a little bit harsh on the OP in fairness. I take the point that OP should have taken proper advise before they became a director of a limited company. However that being said, there has been no underclaration of tax here. The fine is levied as a deterant to ensure that directors file their personal returns even if the liability is nil. However it is accepted by revenue that it unintentionally catches out some directors who are not their intended target.

Lots of people become unpaid company directors and hold more then 15% of the shares. Lots of companies do not make any money and to read more into it then this is very unfair in my opinion.

Kind Regards


Dbran

Mongarra

You say in your opening post that your husband is a proprietary director. If this is so then he is obliged to file a return each year. If he owns less than 15% then he is not a proprietary director and is not within the definition of "chargeable person" for self-assessment as your only other income is through the PAYE system.

I agree with dbran regarding an appeal but it is Revenue you are dealing with and I wouldn't be as confident as dbran about a successful outcome. Best of luck with it.

Alan Shore

This is a very extreme penalty. The surcharge applies to the spouses liability as well which is ridiculous.

I don't know of any relief in legislation for the surcharge, your position is compromised by the fact that you have not filed for 5 years.

maireadH

i know. The problem is, we erroneously presumed that, as there was no income from the directorship, normal PAYE rules applied. it would be reasonable to apply the penalty to directorship income.

royalcarlowgc

I could be wrong here but if your husband is a proprietary director then I think you lose your paye credit of €1,650 in 2012 in previous years???

dbran

royalcarlowgc wrote: »

I could be wrong here but if your husband is a proprietary director then I think you lose your paye credit of €1,650 in 2012 in previous years???

No. They are still entitled to it if they have PAYE income.

Regards


dbran