Interest on Preliminary Tax

Heisenburg81

Would the following be a correct interpretation of interest charges for late preliminary income tax;

Example

Case V income undeclared for the years 2014 to 2016;

2014 - €20,000
2015 - €20,000
2016 - €20,000

Assuming high rate taxpayer and assuming 40% marginal rate in each year.
Therefore, 2015 preliminary income tax understated by €8,000 if based on 100% prior year liability.
Does the interest run from 01/11/2015 to 31/10/2016 - being the due date for the balance of 2015 tax payable? Or, does it run for a different period?

Similarly, 2016 interest on understated preliminary income tax running from 01/11/2016 to 31/10/2017?

The above would be in addition to interest on the actual underpayments running from for example, 2015 liability - 31/10/2016 up to date of settlement of liability?

ahnowbrowncow

Heisenburg81 wrote: »

Would the following be a correct interpretation of interest charges for late preliminary income tax;

Example

Case V income undeclared for the years 2014 to 2016;

2014 - €20,000
2015 - €20,000
2016 - €20,000

Assuming high rate taxpayer and assuming 40% marginal rate in each year.
Therefore, 2015 preliminary income tax understated by €8,000 if based on 100% prior year liability.
Does the interest run from 01/11/2015 to 31/10/2016 - being the due date for the balance of 2015 tax payable? Or, does it run for a different period?

Similarly, 2016 interest on understated preliminary income tax running from 01/11/2016 to 31/10/2017?

The above would be in addition to interest on the actual underpayments running from for example, 2015 liability - 31/10/2016 up to date of settlement of liability?

2014

Preliminary tax on €18,000 (90% of 2014's income) was owed on the 31/10/14 (Mid november if filing through ROS) so interest started accruing from that date. This includes Income Tax, PRSI and USC.
Then on the 31/10/15, 2014's remaining tax balance was due. Tax due on the 31/10/15 would be roughly €8,000 IT, €800 PRSI and at least €1,100 USC, depending on income bracket, plus interest of €713 (about 8% per annum) accrued from non payment of preliminary tax on the 31/10/14.

That's before you take into account surcharge and penalties for late/not filing tax returns and penalties for late payment of tax due.

Heisenburg81

ahnowbrowncow wrote: »

2014

Preliminary tax on €18,000 (90% of 2014's income) was owed on the 31/10/14 (Mid november if filing through ROS) so interest started accruing from that date. This includes Income Tax, PRSI and USC.
Then on the 31/10/15, 2014's remaining tax balance was due. Tax due on the 31/10/15 would be roughly €8,000 IT, €800 PRSI and at least €1,100 USC, depending on income bracket, plus interest of €713 (about 8% per annum) accrued from non payment of preliminary tax on the 31/10/14.

That's before you take into account surcharge and penalties for late/not filing tax returns and penalties for late payment of tax due.

If already a chargeable person - Proprietary Director - Providing all Schedule E income paid in 2013 could the preliminary tax for 2014 be based on 100% of the 2013 taxes, thus fulfilling the Preliminary Tax obligations for 2014?
No surcharges as original returns filed on time.

ahnowbrowncow

Heisenburg81 wrote: »

If already a chargeable person - Proprietary Director - Providing all Schedule E income paid in 2013 could the preliminary tax for 2014 be based on 100% of the 2013 taxes, thus fulfilling the Preliminary Tax obligations for 2014?
No surcharges as original returns filed on time.

There will still be a surcharge as an amended tax return will have to be filed.

"Section 1084 also provides that the filing, on time, of an incorrect return, either carelessly or deliberately, is deemed to be late filing."

Otherwise everyone could knowingly file an incorrect return on time and amend it whenever they pleased.

Heisenburg81

ahnowbrowncow wrote: »

There will still be a surcharge as an amended tax return will have to be filed.

"Section 1084 also provides that the filing, on time, of an incorrect return, either carelessly or deliberately, is deemed to be late filing."

Otherwise everyone could knowingly file an incorrect return on time and amend it whenever they pleased.

True - but doesn't apply where a tax geared penalty is applied