Payment received late for once-off casual work. Which tax year?

Donald Trump

Scenario is this:


Person worked abroad outside EU for a few years.


Can back to Ireland in 2018. Did a bit of "work" remotely for connections abroad after returning. Was on a casual basis with no real contract. Payment was not guaranteed nor necessarily expected. Lets just say it was a few people they used to know personally abroad, who knew this person had time on their hands, and asked them to do some work on a website and system for their new business.



Fast forward to March 2019. Payment suddenly arrives. Nice surprise. The business is now up and running and doing well and they are happy to pay for the work done. Decent enough chunk of change. A couple of grand. The business is naturally putting the expense through their books and there are some extra forms to be filled out due to the work being done remotely and payment being sent abroad. So that will go to the local tax people over there and will probably/possibly be shared back to Ireland. I don't know how integrated the countries are with sharing this data.



My understanding is that, if the person had declared the "work" last year, then they would have had to pay very little, if any, tax on it as they had no other income since returning in 2018.



So what are their options now for 2019? If they want to do things correctly of course. Just register somehow for 2019 and pay top rate of tax on it? Assume the person now has regular job, will be earning enough to pay top rate of tax in 2019 and don't do the casual work any more. It was a one-off and isn't as if it is going to be an on-going thing.



Work was done in 2018 but there is nothing really to prove that. It was done on casual or informal basis and anyway it was not declared. Is there any way to retroactively declare it for 2018? I assume there would be some kind of penalties involved. Payment though was not sent til 2019. Person is not registered as anything other than as PAYE worker.



What would the options be?

barneystinson

Donald Trump wrote: »

Scenario is this:


Person worked abroad outside EU for a few years.


Can back to Ireland in 2018. Did a bit of "work" remotely for connections abroad after returning. Was on a casual basis with no real contract. Payment was not guaranteed nor necessarily expected. Lets just say it was a few people they used to know personally abroad, who knew this person had time on their hands, and asked them to do some work on a website and system for their new business.



Fast forward to March 2019. Payment suddenly arrives. Nice surprise. The business is now up and running and doing well and they are happy to pay for the work done. Decent enough chunk of change. A couple of grand. The business is naturally putting the expense through their books and there are some extra forms to be filled out due to the work being done remotely and payment being sent abroad. So that will go to the local tax people over there and will probably/possibly be shared back to Ireland. I don't know how integrated the countries are with sharing this data.



My understanding is that, if the person had declared the "work" last year, then they would have had to pay very little, if any, tax on it as they had no other income since returning in 2018.



So what are their options now for 2019? If they want to do things correctly of course. Just register somehow for 2019 and pay top rate of tax on it? Assume the person now has regular job, will be earning enough to pay top rate of tax in 2019 and don't do the casual work any more. It was a one-off and isn't as if it is going to be an on-going thing.



Work was done in 2018 but there is nothing really to prove that. It was done on casual or informal basis and anyway it was not declared. Is there any way to retroactively declare it for 2018? I assume there would be some kind of penalties involved. Payment though was not sent til 2019. Person is not registered as anything other than as PAYE worker.



What would the options be?

Assuming the amount is less than 5k: File a Form 12 tax return for 2018, including the amount recently received, as 2018 income. It is the simplest and correct way to account for the income.

Donald Trump

barneystinson wrote: »

Assuming the amount is less than 5k: File a Form 12 tax return for 2018, including the amount recently received, as 2018 income. It is the simplest and correct way to account for the income.

Thanks.


I think it was about 10-12k or thereabout. Definitely less than 15k but definitely more than 5k. I reread my post above and my phrase "couple of grand" was probably a bit misleading! Will this complicate things? Was in a foreign currency too. The Euro equivalent is something of that magnitude from what I know



Would there be any penalties etc? I was somewhat aware that you can correct a return but no return was made at all for 2018 due to not working (other than this bit) within the EU in that time. So there was no PAYE paid or anything like that. The person was not working otherwise (obviously not claiming benefits either). Would there be penalties for late payment?

Donald Trump

I just had a thought. What proof is needed to show this was genuine income? Obviously there will be a bank payment from the company (I think by cheque) for my example.

There must be something in order to prevent money laundering. Or else you could get all these dodgy characters "paying" themselves from companies set up abroad in lax regulation regions. (This isn't the case for my example, I was speaking generally). Would there be additional paperwork to be filed on this side to "prove" the payments were actually for work done? Maybe this is something that they would only require if you were transferring hundreds of thousands or something.

As I think I said in the first post too, for my example, it will be a one off. Person now has a "proper" job and wouldn't be taking on this kind of thing again. Was a nice few quid, but I get the impression that it was also a lot of effort and wouldn't really be feasible alongside a 9-5. They were happy to do it at the time to keep themselves busy, but barring losing their job, it wouldn't be on-going.

Donald Trump

I read a bit online there that you are supposed to pay and file and pay preliminary tax before 31st Oct that year. And that they "preliminary tax" can be defined as 100% of the tax due in the previous year (in this case, 2017, it would have been 0 due to being abroad). Would this be true? That in the case of your first filing, you would get away with a figure of 0 for preliminary tax? Perhaps they could just file now, and pay the interest charge on that 0% and then do the actual filing in a few months?

I read that the actual tax return for 2018 would have be be filed by 31st Oct 2019. I assume this is where you adjust for actual vs what you paid preliminary.

But would the fact of not registering for pay and file mean that they missed the chance to get on they system and get away with the 0% preliminary tax for 2018 by last Oct 31st?