Jimmy Deenihan
Question:33 Mr. Deenihan asked the Minister for Finance the position regarding the proposed changes to the self-assessment system which he made in the Finance Bill, 1998; and if he will make a statement on the matter. [13503/98]
Written Answers. - Tax Assessment.
This year's Finance Act contained a number of provisions aimed at streamlining and simplifying the system of self-assessment for income tax and facilitating improved compliance in the area of preliminary tax — that is the payment on account which has to be made by every self-employed person during the course of the tax year.
The main provision involved bringing together, with effect from 1999, both the preliminary tax payment deadline and the return filing deadline to a new single pay and file date of 30 November, This single deadline would replace the present dual system whereby preliminary tax for the current year is paid on 1 November and the return filing deadline for the previous year is the following 31 January. The new pay and file date proposed, 30 November, was at the outer limits of what was feasible given the need to make sure that preliminary tax did not spill over into the following financial year and at the same time allow practitioners the maximum possible time within which to prepare and lodge business accounts and returns with Revenue. To help support the change, and reduce the paperwork burden on practitioners, Revenue undertook to reduce significantly the extra documentation that must at present be sent in with the tax return.
Following publication of the new provisions in the Finance Bill, a case was made to me by the accountancy bodies and the Institute of Taxation that bringing forward the filing deadline by two months would cause difficulties, particularly for some smaller practices. I responded to these concerns by making an amendment on Committee Stage to ensure that the proposed changes as regards bringing forward the filing date, and the consequential changes to the preliminary tax payment date, which were due to come into effect from November 1999, will not now come into operation without a ministerial order for a particular year of assessment. This is to allow time for further discussion with the practitioners on their problems and concerns and to see how we can possibly get around them.
The matter has been referred to the tax administration liaison committee, which is a standing committee made up of senior Revenue officials and representatives of the accountancy bodies, the Institute of Taxation and the Law Society. This committee is at present carrying out a full assessment of the impact of the proposals on tax practitioners and will report back to me in due course.
I should add that I have asked this committee to look also at the implications of moving the income tax year from a 5 April basis to a calendar year basis, particularly in so far as any such change would impact on self-employed taxpayers and on tax payment and return filing dates. I have made clear on a number of occasions that I believe this is ultimately the simplest and best way forward. Moving to a calendar tax year has of course implications beyond just the self-employed — for example, on the PAYE and PRSI systems — and I have established an interdepartmental working group chaired by my Department to consider the overall issues involved in making the change as and from the calendar year starting 1 January 2000, and to make recommendations on how this can be achieved. This working group will be reporting to me later this year.