Tuesday, 1 October 2019

Questions (149)

Robert Troy


149. Deputy Robert Troy asked the Minister for Finance further to Parliamentary Question No. 55 of 19 September 2019, if he will address issues (details supplied). [39833/19]

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Written answers (Question to Finance)

The Deputy has raised several issues in his question concerning the answer I supplied to PQ No. 55 of 19 September 2019 about surcharges for those self-employed who fail to make a local property tax return or pay their LPT. As I set out in that response, 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 such surcharges for the late payment of Local Property Tax. 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. Compliance is not just about ensuring the submission of returns and the payment of outstanding tax liabilities; there is also a timing aspect to compliance.  Returns must be submitted and payments must be made by a specified date(s).  The suggestion in the Deputy's question, of reducing a penalty to nil following the late submission of returns or payments, would only serve to incentivise such late submission. Likewise, as outlined in my previous response, a surcharge is designed to act as a deterrent and, when there is a late compliance, the income tax surcharge is capped at the amount of the LPT liability: this considered a fair and proportionate deterrent given the size of LPT liabilities.  

In relation to comparisons between the treatment of PAYE workers and the self-employed, unlike self-employed taxpayers, PAYE taxpayers are not generally required to submit an annual income tax return. Therefore, it is not possible to impose a surcharge on PAYE taxpayers for failure to submit a return on time. Revenue’s compliance actions are tailored according to the type of taxpayer involved and the most effective way to ensure compliance. This is illustrated by the use of the facility to collect LPT liabilities through mandatory deduction at source from a PAYE taxpayer’s salary or pension, which is considered to be a fair approach in the context of the surcharge on income tax that can apply to self-employed taxpayers who fail to meet their LPT liabilities.  Moreover, all taxpayers who fail to submit an LPT return, or who submit an incorrect LPT return, are liable to a penalty of the amount of the LPT that would be payable with a correct return, subject to a maximum penalty of €3,000.

Adding  the LPT liability to a self-employed person’s income tax liability, as the Deputy suggests, would not, of itself, ensure that the LPT was actually paid. This would not be a similar treatment to a PAYE taxpayer who has no choice about when, or how much of, his or her LPT liability is paid, where deduction at source by the employer or pension provider is made mandatory.

Finally, it should be noted that the vast majority of property owners pay their LPT on time. There is no reason for property owners to put themselves in a position where they become liable to a surcharge.  If an individual has particular financial circumstances which cause difficulties in meeting his or her LPT liability, he or she may be entitled to a deferral of the tax or may avail of one of a number of payment methods to discharge the liability evenly over the course of the year.