Revenue allowed to back tax prsi?

BlackWizard

I was working for the first 3 months this year as a director. I was not paying employer prsi.

Now I'm working for a different company as a normal employee and their accountant has told me I owe a lot of tax. It looks like the employer prsi that I was not paying is now owed.

Is this correct? I feel like I took a risk taking up a director role in a start up for the first 3 months and should not be punished afterwards if it does not work out and I need to find normal employment.

The amount extra owed is between 1-2k euro which was taken out of my salary this month. HUGE chunk of my salary is gone this month.

sue345

Firstly your PRSI is different to Tax (PAYE & USC) and is dealt with through the Social Welfare not the Revenue office.

PRSI also doesn't work on a cumulative basis but on your earnings in a specific pay period so it sounds like he isn't talking about PRSI owed from the first 3 months of the year.

Assuming that it is PAYE & USC the accountant is talking about, it sounds like the Revenue has put you on a Normal tax basis, did you happen to hand in a P45 with your director earnings to your new job?

If so & the Revenue have put you onto a normal tax basis, when running payroll the system will look at your entire earnings and tax paid for the year (to date) and will work out how much tax is owed based on that.

From the sounds of it this is the case, the Revenue should have put you on a Week 1 / Month 1 basis for the remainder of this year (2014), this looks at your earnings in the specific pay period alone (not at your cumulative year to date) & will work out taxes owed for that period specifically.

One the year is out (31st December) you will then need to contact the Revenue & request a P21 balancing statement from them, the Revenue will look at your circumstances for 2014 and will calculate if you have over or unpaid in your taxes.

If however it really is a PRSI issue, it is up to you / the Social Welfare to sort out any over / under payments. It seems a bit odd that the accountant should be looking at that since you should be on Class A PRSI in this new job - This is standard PRSI class for all employees unless the Social Welfare advises otherwise.

Hope this helps

AlexisM

BlackWizard wrote: »

I was working for the first 3 months this year as a director. I was not paying employer prsi. ...I feel like I took a risk taking up a director role in a start up for the first 3 months ...

How much (%), if any, of the start-up company did you own/control? The way you've worded it, it sounds like it wasn't your own company. Either way, I don't think employER's PRSI is an issue for you. If you owned/controlled the company, you would not be classified as an employee so no employer's PRSI would be due. If you didn't own/control the company, then you were an employee and it is the company's responsibility to pay employer's PRSI - it is their liability, not yours.

BlackWizard

I might have completely misunderstood the situation then. I reckon it is a PAYE thing. My old accountants had me on Wee1 / Month 1 basis.

I will ring my current accountant and ask them about this.

I'll update the thread after lunch Thanks guys

BlackWizard

Okay so I finally got to the bottom of this.

I received double payments for two months in a row from two different companies. So myself and all accountants involved got confused here as to what was going wrong.

I'll take a look at the end of the year to see if I owe more or if revenue owes me. It won't be a lot this time around.

Thanks for the help!