I am advised by Revenue that the full range of its collection and enforcement options applies in relation to the local property tax (LPT) as it does in relation to other taxes and duties under its care and management. As with other taxes and duties, penalties can be imposed for various offences such as failure to submit returns or other documentation or the provision of false information. Section 38 of the Finance (Local Property Tax) Act 2012 (as amended) provides for the imposition of surcharges for the late payment of Local Property Tax.
In the normal course of events, a person is penalised for the late submission (or non-submission) of an income tax return by the imposition of a surcharge on his or her income tax liability. However, a person who has submitted his or her income tax return on time can also be liable to an income tax surcharge in respect of the late submission of his or her LPT return or the failure to pay LPT. Where a liable person has not submitted his or her LPT return by the time that he or she submits an income tax return, the income tax liability is increased by 10% up to a maximum increase of €63,485. Where the LPT return is subsequently submitted and the associated LPT liability is paid, the income tax surcharge is capped at the amount of the LPT liability.
Revenue can require employers and pension providers to mandatorily deduct LPT at source from a person’s wages or pension, where the person fails to comply with his or her LPT obligations.
As such an enforcement option can apply in the case of PAYE taxpayers, it is considered that linking non-compliance with LPT by self-employed persons with a surcharge on their income tax liabilities is both fair and proportionate. The challenge of compliance is particularly significant for LPT owing to the nature of the tax itself and the wide demographic liable for the tax, a significant proportion of which are not taxpayers to whom the standard collection and enforcement methods could be applied.
Given the level of LPT liability for most property owners, the application of a 10% surcharge on a person’s LPT liability alone would be unlikely to act as an effective deterrent to non-compliance. As I have already stated, having incurred a surcharge, a self-employed person has the opportunity to cap the surcharge at the amount of the LPT liability due by submitting an LPT return and/or paying the LPT liability.