Dáil Éireann Debate, Wednesday - 10 December 2014
65. Deputy Brian Walsh asked the Minister for Finance the penalties, interest and surcharges applied by the Revenue Commissioners where a person or company is late in filing his, her or its accounts; his views that these are reasonable or if there are plans for a review. [47442/14]
View answerI am advised by the Revenue Commissioners that where an individual or a company file their tax return late, a surcharge known as a late filing surcharge applies. The current rate of surcharge for late filing of Income Tax and Corporation Tax returns is:-
- 5% of the tax due subject to a maximum of €12,695 where the return of income is delivered before the expiry of 2 months from the specified return date for the chargeable period, or
- 10% of the amount of tax due subject to a maximum of €63,485, where the return of income is not delivered before the expiry of 2 months from the specified return date for the chargeable period.
I am also advised that up until recently certain accounts details were an integral part of Income Tax and Corporation Tax returns and relevant accounts information was provided on the appropriate tax return.
Since November 2012, taxpayers have had the option to file separate financial statements in iXBRL format using Revenue's Online Service (ROS). iXBRL (inline eXtensible Business Reporting Language) is a language which allows financial information to be communicated and presented in a format that may be recognised and read by both people and computers. A mandatory requirement to file iXBRL financial statements as part of a tax return now exists on a statutory basis and, in line with the approach that Revenue took with e-filing, this is being introduced on a phased basis. To date, the mandatory regime applies only to larger companies. During later phases, all companies, as well as individuals, will come within the mandatory regime. In the meantime, individuals, and companies not covered by the mandatory regime, continue to provide certain accounts details in their appropriate tax return form. To allow for the transition to the mandatory regime, I am informed that Revenue has made certain concessions for taxpayers on the filing deadline for the submission of the iXBRL financial statements.
I am further advised that a late filing surcharge also applies to Local Property Tax (LPT) returns. Where a person who is liable for LPT files a return for income tax or corporation tax and, at the time of filing the income tax or corporation tax return they have failed to file their LPT return and make their LPT payment as due, a surcharge of 10% of the amount of income tax or corporation tax payable will be applied. If the liable person becomes LPT compliant the surcharge will be capped at the amount of the LPT liability.
Regarding penalties, I am advised, that where a person fraudulently or negligently delivers an incorrect return on time that return is deemed to have been delivered late and the surcharge for late filing is applied. However, where, in the context of a Revenue compliance intervention, a tax geared penalty is applied by Revenue under section 1077E Taxes Consolidation Act 1997 on the additional tax arising due to the fraud or neglect it has been Revenue practice not to seek an additional late filing surcharge in these circumstances. In the current Finance Bill I have placed that Revenue practice on a legislative footing.
With reference to the charging of interest, I am advised by the Revenue Commissioners that interest is charged on late payments and is not related to timely filing. The current rates of interest on late payments are 8% per annum or 0.0219% per day, on overdue income, corporation, capital gains taxes or stamp duty, and 10% per annum or 0.0274% per day in respect of overdue VAT and Employers PAYE/PRSI. The rates were reviewed in the Finance Act 2009 and were reduced then from 10% and 11.7% per annum to the current rates of 8% and 10% as outlined above.
The self-assessment system provides for sanctions to address non-compliance relating to timely tax return filing and payment. These sanctions, as well as other factors, help to maximise the levels of voluntary compliance and their impact is borne out by the fact that the overwhelming majority of taxpayers file and pay their taxes on time.
The late filing surcharge is designed as a deterrent and encourages timely filing and payment. I am pleased to see that compliance levels are increasing annually and any measure that might impact would need very careful deliberation.
It is my view that the sanctions provided for in legislation are proportionate and reasonable and they are applied fairly by the Revenue Commissioners. On that basis I have no plans to review the late filing surcharge and other similar sanctions.
