Ken O’Brien
CHARTERED TAX
CONSULTANT
APPLIED TAX
MODULE 3
Income Tax
25th and 26th
January 2013
www.charteredaccountants.ie
EDUCATING
SUPPORTING
REPRESENTING
Schedules D Cases I and II
• Case I Trade
• Case II Profession
• Self Employed - Income Tax
Income and Expenses
• Accounts
• Basis of Assessment
• Commencement and
Cessation
• Expenditure
• Expenditure
prohibited?
• Earnings Basis
• AP ending in tax year
• Special Rules
• Wholly and
Exclusively
• Ex: Entertainment
and Depreciation
Schedules D Cases I and II
•
•
•
•
What is a trade?
Sec 3(1) TCA 1997 – very broad
Case Law
The Six Badges of Trade
6 Badges of Trade
• Subject Matter
• Manufactured items,
Commodities, Property
• Held for a short time?
• Similar and frequent?
• Length owned
• Frequency of
transactions
• Supplementary Work • Advertising, office?
• Circumstances
• Any special ones?
• Motive
• Never irrelevant
Trading?
•
•
•
•
Jay Sugar is a self employed painter.
He invests some money in shares
He buys and sells shares
Is he carrying on a trade or liable to cgt?
Jay Sugar
•
•
•
•
Apply Badges of trade to his activities
Regular buying and selling?
Is only one Badge met?
Revenue Guidance – “whole picture”
Professions
• Reviewed by Courts includes Tax
Consultants
• Artists, Architects, Accountants
• Engineers, Lawyers, Musicians, Estate
Agents
• Insurance Brokers, Doctors, Dentists
Basis of Assessment
•
•
•
•
Schedule D Cases I and II
Chapter 3 of Part 4 TCA 1997
Period of Account
Computational Rules Chapters 6 and 7
Part 4 TCA 1997
Amount Chargeable
• 3 Key Stages
1. Taxable Profit/Loss for Period of
Account
2. Allocate Profit/Loss to Year of
Assessment
3. Calculate Capital Allowances for Year of
Assessment
Section 65 TCA 1997
General Rule
Basis Period = 12 months
ending in the Tax Year
No Accounts ending in Tax
Year
Taxable on Profits of the Year
of Assessment
Accounting Period > or < 12
months
Taxable on Profits of 12
months ending in the Tax Year
Two or more accounts ending
in Tax Year
Taxable on profits of 12
months to later accounts
Section 65 TCA 1997
Accounts Year End 31st March 2012– Accounts Y/e 31st March
2012
2012
AP y/e 31st Oct 2012
AP 16 mths 31st Jan 2014
2012 – Accounts 31/10/2012
2013 – 12 mths 31/12/2012
AP 18 mths 30th Sep 2012
2012 – 12 mths to 30/9/2012
AP y/e 30th April 2012
AP 6 mths 31/10/2012
2012 – 12 mths to 31/10/2012
Sec 66 TCA 1997
• Commencement
• Year 1
• Taxable Profits =
– Profits from commencement to 31st Dec
Sec 66 TCA 1997
• 2nd Year
• 3rd Year
• Sec 65 Rules
• AP Y/E in Tax Year
• 2nd Year Excess
Relief
• Sec 66(3)
• Claim by 31st Oct
after 3rd Year
• Profits in 3rd year
reduced if profits
taxed in 2nd year>
actual profits
Example
• Trade commences 1st May 2012
• Taxable Profits are:
– AP ending 30th April 2013
– AP ending 30th April 2014
€25,000
€20,000
Commencement
2012
1/5/201231/12/2012
€25,000 x 8/12
€16,666
2013
Y/E 30/4/2013
€25,000
2014
Y/E 30/4/2014
€20,000
Subject to 2nd Year
Excess Claim
Second Year Excess
Profits Assessed
Actual Profit
€25,000 x 4/12 = €8,333
€25,000
€21,666
€20,000 x 8/12 = €13,333
Excess
Revised 2014
€20,000-€3,333
€3,333
€16,667
Cessation of Trading
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•
•
•
When does a trade cease?
Disposal of trading stock?
Sale of capital assets?
Gordon and Blair Ltd v The Inland
Revenue Commissioners (40TC 358)
Cessation Rules
• Revision of penultimate year to actual
• Timing of cessation to avoid
underpayment
• Is AP different to Tax Year?
• Avoid underpayment and interest
Change of Accounting Date
•
•
•
•
Refer to rules in Sec 65(3) TCA 1997
Review p/y profits using new AP
Are p/y profits greater after revision?
Revise p/y if “yes” – additional liability
Sch D Cases I and II
• Tax charged on full amount of
profits/gains
• Section 81(2) TCA 1997
• Capital v Revenue
• Wholly and Exclusively Test
Expenses Disallowed
•
•
•
•
•
Section 81(2) TCA 1997
Not wholly and exclusively incurred
Capital expenditure
General Provisions eg bad debt or stock
Depreciation charge per accounts
Items not deductible
• Sec 1080(3) 1997 – interest on overdue
tax
• Sec 865A(4)(b) TCA 1997 – interest on
overpaid tax not taxable
• Sec 840 TCA 1997 Entertainment
Wholly and Exclusively
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•
•
•
•
Sec 81(2) TCA 1997
Apportionment where dual purpose eg car
Purposes of the trade test
Bentleys, Stokes and Lawless v Beeson
Strong and Co of Romsey Ltd v
Woodifield
Capital v Revenue
• Sec 81(2)(f) TCA 1997
• Walker v Joint Credit Card Co STC 427
• Hibernian Insurance Co v MacUimis
(2000) ITR 495
• Accounting treatment
Capital or Revenue?
• Costs of promoting
legislation to gain tax
reliefs for staff
• Legal costs to protect
title to land and
buildings
• Cost of forming a
new holding co
• Revenue
McGarry v Limerick Gas
• Revenue
• Southern v Borax
• Capital
Kealy v O’Mara
Capital v Revenue Expenditure
• Capital Expenditure
– Expenditure incurred on the
acquisition/construction/alteration of premises
• Revenue Expenditure
– Wear & Tear on property and plant (repairs
/maintenance)
• Sec 81(2)(f) TCA 1997 disallows capital
expenditure for CT purposes
• Regent Oil Company v Strick
Capital Allowances
• CA = “Tax Depreciation”
• Plant and Machinery (Includes Fixtures
and Fittings
• Industrial Buildings
• Initial Allowance
• Annual Allowance
• Accelerated Allowances
• Balancing Allowances/Balancing Charge
Plant & Machinery v Ind Buildings?
• Legislation
• Case Law
• Revenue Practice
Plant & Machinery v Ind Buildings?
• Key Question
• Does the item form part of the
premises within which the trade is
carried on? or
• Is it an item with which the trade is
carried on i.e. used in the conduct of
the trade?
Case Law
Shove v Lingfield Park
IRC v Anchor International
All weather race track ≠ Plant
Synthetic grass turf for indoor
pitches = Plant
Attwood v Anduff Car Wash
Drive In and wash hall of car wash
facility ≠ Plant
O’Culachain v McMullan Bros
Ltd
Dunnes Stores v McCronin
Canopies of petrol station = Plant
Jarold v John Good & Sons
Moveable partitioning = Plant
IRC v Scottish & Newcastle
Breweries
Creation of ambience = Plant
Electric light fittings, wall plaques,
tapestries, murals and prints in hotel
Suspended ceiling held part of setting ≠
Plant
Items treated as P&M
• Revenue generally regard the following as
P&M
– Central Heating
– Lifts (excluding lift shafts)
– Security and Fire Alarms
– Heating
– Ventilation
– Sprinkler Systems
– Shelving
– Internal Communication Systems
Capital Allowances
• Sec 284(1) TCA 1997
1. Incurred Capital Expenditure
2. for the purposes of the trade or
profession
3. Asset belongs to claimant
4. Asset is used wholly and exclusively
5. In use at the end of the basis period
6. Burden of Wear and Tear
Sec 284 TCA 1997
• P&M in use at end of AP
• Full year’s CA even where asset in use
only for the last day of AP
• Basis Periods
• Sec 284(2)(b) TCA 1997
• CA restricted where Basis Period < 12
Months
Basis Period
• Basis period is fundamental for CAs
• Identify correct Basis Period for
– Assets Purchased
– Asset Disposals
– Periods of ownership in between
• Sec 306 TCA 1997
– Basis period for a year of assessment
– Period in which final profits for a tax year are
computed under Case 1 of Sch D
Basis Period
• Sole trader makes up accounts to 30th
June 2012
• Plant purchased on 1st July 2011
• Basis period for CA is 30th June 2012
• Basis periods overlapping or with a gap
• CA must be attributed to a Basis Period
Basis Period
• Sec 306(2)(b)(ii) TCA 1997
• Sale of plant during an interval is deemed
to happen in the second Basis Period
• Interval for two successive years of
assessments and a permanent
discontinuance of trade occurs in later
year  Interval treated as part of first
period only
Capital Allowances
• Sec 284(2)(ad) TCA 1997 – Rate 12.5%
• Plant and machinery straight line
• Sec 306 TCA 1997 – commencements
and cessations
• Sec 288 TCA 1997 – Balancing charges
and allowances
• Sec 288 TCA 97 – option to transfer at tax
wdv
Calculate CA and BC/BA
• Tax Year 2011
• Plant Cost €20,000
• CA @12.5% =
€2,500
• Machinery Sold for
€2,500 – bought for
€5,000. Wear and
tear claimed to 2010
€3,125
• Proceeds €2,500
TWDV
€1,875
• BC
€625
Balancing Allowance/Charge
• Sec 288 TCA 1997
• When does a BA/BC arise?
– Disposal of Asset
– Trade use permanently ceases
– Trade ceases
• Adjusts for difference between proceeds
and TWDV of asset
Balancing Charge Example
• Asset Purchased in February 20X3 for €100,000
included in financial statements to 31 December 20X3.
• Asset Disposed of June 20X6 for Proceeds of €70,000
€
Cost
100,000
Wear & Tear 20X3
(12,500)
Wear & Tear 20X4
(12,500)
Wear & Tear 20X5
(12,500)
T.W.D.V 1 Jan 20X6
62,500
Sales Proceeds
70,000
Balancing Charge (Profit)
7,500
Clawback of Capital allowances
Balancing Allowance Example
• Asset Purchased in February 20X3 for €100,000
included in financial statements to 31 December 20X3.
• Asset Disposed of June 20X6 for Proceeds of €50,000
€
Cost
100,000
Wear & Tear 20X3
(12,500)
Wear & Tear 20X4
(12,500)
Wear & Tear 20X5
(12,500)
T.W.D.V 1 Jan 20X6
62,500
Sales Proceeds
50,000
Balancing Allowance (Loss)
12,500
Additional CA granted
Deemed CAs
•
•
•
•
Sec 287 TCA 1997
CAs deemed to have been claimed
Applies even where no CAs claimed
Notional Wear & Tear
Election for BC
• Sec 290 TCA 1997
• Election to reduce cost of replacement
asset by amount of BC
• CA calculated on Cost of new asset - BC
• BC crystallises on disposal of replacement
asset
Gifts and Sales < MV
• Sale, insurance, salvage or compensation
received used to compute BA/BC
• Sec 289 TCA – substitute OMV
• Applies to gifts
• Election under 289(6) TCA 97 for TWDV
Transfers @ TWDV
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•
•
•
Sec 288 TCA 1997
Option to transfer assets @ TWDV
No BA or BC on disposal
Subsequent owner takes over asset at
TWDV
Transfers @ TWDV
• Sale or transfer of P&M
• Purchaser uses it for trade purposes
• Seller and purchaser make an election in
writing
• Both are connected
• Option to transfer at lower of MV or TWDV
• Option not available for transfer to a
company by a non company eg sole trader
incorporating
Fixtures & Fittings
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•
Sec 284 TCA 1997
Sch D Case V Rental Income
Wear & Tear on capital expenditure
Furniture, Kitchen Appliances, etc
Wholly & Exclusively – expenditure
Furnished house let on bf commercial
terms
• Writing down allowance over 8 years
@12.5% straight line
Motor Vehicles
• Sec 373-376 TCA 1997 – passenger
vehicles
• CA Qualifying Cost restricted
• Pre 30th June 2008 - €24,000 limit
• Sec 380L TCA 1997 new greener rules
• Proceeds restricted for BC
• Sec 286 TCA 97 – Taxis and short term
hire
Motor Vehicles
• CA on passenger motor vehicles
• 12.5% Straight Line since 4th Dec 2002
• Sec 373 TCA 1997
– Cars purchased before 1st July 2008
– Maximum amount €24,000 = “Specified
Amount”
CA on Cars from 1st July 2008
Part 11C TCA 1997 – Sec 380K-380P
Vehicle
•
Category
A
B/C
D/E
F/G
Emission
Level
0-120 g/km
Maximum Amount
€24,000 (Specified
Amount)
121-155
€24,000 (Specified
g/km
Amount)
156-190g/km Lower of 50% of Retail
Price or 50% SA
>190g/km
No CAs
Taxis and Short Term Hire
• No Specified Amount applies
• CA of 40%
• Reducing Balance
Cars - BA and BC
• Proceeds on sale/Deemed proceeds on
disposal
• Restricted where CAs were restricted
Example
• Sale Proceeds = €10,000
• Car Cost €30,000
• Specified Amount €24,000
• Restricted SP = €10,000 x €24,000/€30,000
Motor Leasing Expenses
• Sec 380MTCA 1997
• LC x Capital Limit*
Lease Price
• €24,000 subject to CO2 emissions
• Same categories as for CA on cars
Industrial Buildings
• Sec 268 TCA 1997
• Industrial Buildings or Structures
• Property based tax incentive schemes
Industrial Buildings
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•
Located in the State
Manufacturing facilities
Nursing Homes
Hospitals
Sports Injuries Clinics
Hotels
Holiday Camps
Airport Buildings
Industrial Buildings
• Exclude site cost, associated professional
fees and Stamp Duty
• Where trader builds an industrial building
– professional fee allowable
• Refurbishment expenditure qualifies
• Reconstruction, repair, provision of water,
sewage, heating
10% Rule
• Costs related to offices, showrooms, retail
shops and dwelling houses excluded
• Sec 268(8) TCA 97 – 10% rule
• Where costs of construction of non
qualifying area ≤ 10% of total costs
• Entire construction cost qualifies
IBAA
• Industrial Buildings Annual Allowance
• Must hold “relevant interest” at end of
basis or accounting period
• Sec 269 TCA 1997 – legal interest,
freehold or leasehold
• Held by person who incurred expenditure
Rates of IBAA
• From 1st April 1992 – 4% pa net of grants
• From 4th December 2002 – Hotels @4%
• Transitional provisions – 15% for 6 years
and 10% in Year 7
• IB life of 25 years from date first used
• Hotels
– 25 years for expenditure from 4/12/2002
– 7 years for expenditure 26/1/1994-4/12/2002
– 10-50 years in other cases
Calculating IBAA
• Sec 279 TCA 1997 – special rules
• IBAAs normally given to person
– who incurred the construction expenditure or
– who holds the relevant interest in relation to
that expenditure
IBAA – First Sale
• Sale of IB before it is used or
• Sale of IB within 2 years after it
commences to be used
• Purchaser deemed to have incurred
capital expenditure on construction on
date purchase price is paid
• Amount of deemed expenditure –
distinguish between Non Builder and
Builder
Expenditure by Non-Builder
• Building constructed by non-builder
• Purchaser deemed to have incurred
expenditure on date of purchase on lower
of
– Actual construction costs or
– Net price paid by taxpayer
Expenditure by Builder
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•
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•
Building sold by a builder
Purchaser claims IBAA on net price paid
Includes builder’s profit
Where > 1 sale before building used or
within 1 year after it commences to be
used
– Deemed expenditure = lower of net price paid
on first sale and net price paid on last sale
Net Price Paid
•
•
•
•
B x C/(C+D)
B = Purchase Price
C = Construction Costs
D = Site Cost
Example Sale by Builder
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Purchase price = €1m
Construction costs = €500k
Site Cost = €350k
Purchased new and unused
B x C/(C+D) =
€1,000,000 x
€500,000/(€500,000+€350,000) = €588,235
• IBAA claimed on €588,235
Example Sale by non Builder
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•
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•
Purchase price = €1m
Construction costs = €500k
Site Cost = €350k
Lower of
Actual Construction Cost = €500,000 or
€1,000,000 x
€500,000/(€500,000+€350,000) = €588,235
• IBAA claimed on €500,000
Sale of Industrial Building
• Sec 274 TCA 1997
• Sale within tax life of IB
– Balancing Charge or Balancing Allowance
• Sale outside tax life of IB
– No Balancing Charge or Balancing Allowance
Balancing Charge/Allowance
• Sec 274 TCA 1997
• Balancing Charge/Allowance
– Relevant Interest in IB is sold
– Relevant Interest, being leasehold, ends
– Building is demolished or destroyed or ceases
altogether to be used
– Consideration other than rent is paid for a
lesser interest created our of the relevant
interest
Balancing Charge/Allowance
• Sec 274 TCA 1997
Balancing Allowance
Balancing Charge
•Amount of residue of
expenditure > Sale, Salvage
or Compensation
•Residue of Expenditure =
Unused Capital Allowances
•Amount of residue of
expenditure < Sale, Salvage
or Compensation
•BC cannot exceed CA
actually made
•Residue of Expenditure =
Unused Capital Allowances
Loss Relief
•
•
•
•
Sec 381(3) - Current Year Losses
Sec 392 TCA – Augment Loss with CA
Sec 382 TCA – Carry forward of losses
Sec 388 TCA – Terminal Losses
Losses
• Calculated in same way as adjusted profit
• In practice, based on loss for AP ending in
tax year
• Commencement rules as for profits
• Time limit Sec 381(6) – within 2 years
Current Year Losses
• Order of set off Sec 381(3) against other
income in year of loss
1. Against earned income
2. Against unearned income
3. Against earned income of spouse
4. Against unearned income of spouse
Capital Allowances and Losses
• Sec 392 TCA
• Losses can be created or increased
• CA for the year of assessment – not CA
carried forward
• Offset CA against BC first
CA and Losses Example
•
•
•
•
Taxable Profits 2012
Capital Allowances
Sec 381 Loss
Spouse Salary 2012
€5,000
(€7,000)
(€2,000)
€30,000
• Claim Sec 381 Loss by 31/12/2014
Terminal Loss Relief
• Sec 385 - 390 TCA 1997
• Permanent discontinuance of
trade/profession
• Loss can be set off against profits of
previous 3 years of assessment
Pro Forma Computation
Profit before tax per Accounts
Add Back
x
Depreciation
x
Entertainment
x
Private use of Car
x
Balancing Charge
x
x
Deduct
Rental Income
x
Investment Income
Adjusted Profit
x
x
X
Capital Allowances
x
x
Taxable Profits
x
Self Assessment
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Part 41 TCA 1997
Chargeable persons Sec 950
Register on form TR1/ROS
Pay and File Deadlines
Interest, Surcharge, Penalties
Revenue Audits
Chargeable Person?
• Company Director not
fully PAYE or15% s/h?
• Rental Income Losses?
• Owner of foreign bank
account/offshore fund?
• Employee exercising
share options?
• Yes
• Yes
• Yes
• Yes
PAYE Taxpayers
• Gross non- PAYE income <€50,000
• Net assessable non-PAYE income <
€3,174
• TB 62
• If non-PAYE income is coded
self
assessment does not apply
Directors
• SP IT/1/93
• Directors liable to file Tax Returns under
self assessment
• Exclusions for
– Directors of shelf companies
– Directors of dormant companies
– Temporary directorships prior to
commencement of trading
Directors
Non Proprietary Directors
• < 15% Share Capital
• Not otherwise chargeable persons
• All income subject to PAYE
Proprietary Directors
• >15% control of ordinary share capital
• Spouses/Civil Partners brought within self
assessment where joint assessment
applies
Tax Returns
• Sec 951 TCA 1997 – obligation to file
• Filing deadline 31st October
– Extension (non stat) to mid November for ROS
• Chargeable person must file Tax Return
– unless Revenue confirm in writing that he is not
obliged to file
• Sec 1084(4) TCA 1997
– first year of setting up trade or profession
– Filing date is 31st October two years later
Tax Payment
• Sec 958 TCA 1997
• Preliminary Tax due 31st October
• 100% p/y or 90% current year or 105% prepreceding year
• BES/Film Relief excluded
• Extension to mid November for ROS pay
and filers
• PT 2012 – include 5% USC charge on
specified property reliefs if based on 100%
Self Assessment Example
John’s situation October 2012
• 2011 Tax liability
€15,000
• 2011 Preliminary tax paid €14,000
• 2012 Estimate of tax
€12,000
What do you advise John?
Self Assessment Solution
2011 Tax Return
File by 31/10/2012
2011 Balance Due
Pay €1,000 by
31/10/2012
2012 Preliminary
Tax
Pay €12,000 by
31/10/2012
Tax Returns
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•
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•
Form 11 – self assessment
Form 12 – Employees, non prop dirs
Both on www.revenue.ie
Filing using ROS has advantages
– Extension to mid Nov for pay & file; faster
refunds/assessments
– Most charge persons now within e filing
Mandatory e-Filing
•
•
•
•
Phased in since 2009
Compulsory electronic payment and filing
Section 917EA TCA 1997
Exclusions if taxpayer does not have
capacity to e file and pay – Revenue
approval
• Insufficient access to internet
• Prevented by reason of age or physical
infirmity
Mandatory e-Filing
• Phase 1
1st January 2009 – LCD cases
• Phase 2
Companies with
– turnover> €7.3m
– > 50 employees
– All public bodies
Mandatory e-Filing
• Phase 3A
From 1st June 2011- Self Employed
individuals:
– filing Form 46G
– subject to High Earner Restrictions
– Acquiring or benefitting from Foreign Life
Policies; Offshore Funds or products
– Claiming certain residential property based
incentives and IBAAs
Mandatory e-Filing
• Phase 3A
From 1st June 2011
All
– Companies
– Trusts
– Partnerships
– Collective Investment Undertakings (CIUs)
– European Economic Interest
Groupings(EEIGs)
Mandatory e-Filing
• Phase 3B
From 1st October 2011
Employers with > 10 Employees
• Phase 4
VAT Registered Cases
Chargeable Persons claiming certain
reliefs
Mandatory e-Filing Phase 4
RACs contributions
PRSA contributions
Overseas Pension
contributions
AVCs
Sportspersons Retirement
Relief
Artists Exemption
Woodlands Exemption
Patent Income Exemption
Tran border Relief
BES
Seed Capital Relief
Film Relief
Significant
Buildings/Gardens
Interest for shares/loans to
company/partnership
Mandatory e-Filing
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•
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•
Penalties for non-compliance
Sec 917EA TCA 1997 – penalty €1,520
Section 1084 TCA 1997 surcharge
Specified taxpayer could be liable to
– Penalty for not filing online
– Penalty for not paying PT online
– Surcharge for not filing
Notice of Assessment
•
•
•
•
Sec 954 and 955 TCA 1997
4 year time limit where full disclosure
Review notice of assessment immediately
30 days to appeal
Interest and Penalties
• Sec 1080 TCA 1997
• Interest if late payment or PT insufficient
• Rates
– From 1/4/1998 to 31/3/2005 0.0322% per day
– From 1/4/2005 to 30/6/2009 0.0273% per day
– from 1/7/2009 0.0219% per day
• Runs from due date of tax
Late Filing Surcharge
• Sec 1084 TCA 1997
• No credit for PAYE for proprietary
directors
• Surcharge considered part of income tax
for year
Surcharge
Return filed < 2
months late
5%
Surcharge
Max
€12.695
Return filed > 2
months late
10%
Surcharge
Max 63,458
Risk Management Issues
• Maintain a client database
• Use a standard Client Tax Return
Checklist – updated annually
• Check PT payment is sufficient
• Advise client in time to avoid late payment
Risk Management
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•
•
•
•
Use a systematic approach for all clients
Review computations
Identify high risk cases
Checklists are only a tool
Take objective view of both old and new
clients
Tax Calculations and Returns
• Late filing
• Late filing for single or separate
assessments
• Late payment
• PT underpaid
• Incorrect assessment not addressed
within 30 days
Key Technical Issues
1. Tax Residency Status of client
2. Client and spouse/civil partner
– Residence, Ordinary Residence, Domicile
3. Is the client a chargeable person?
4. Method of assessment joint; single;
separate
5. Sources of Income and Expenditure and
records
Key Technical Issues
6. Claim for credits, reliefs and deductions
–
Prior 4 years?
7. Changes in status since previous year's
Return?
–
Marital; Accounting Year End; trading
activities?
8. PRSI and USC properly calculated?
9. Correct taxes paid on time ?
Tips to Minimise Risks
Preliminary Tax
Tax Return Filing
ROS Advantages
Notice of Assessments
•Exclude BES/EIIS and
Film Relief in 100% P/Y
calculation
•PT based on joint
liability for married
couples/civil partners
•If 100% p/y, 90% of
current year or 105%
pre-preceding year tests
not met
balance
of tax due 31st October
in tax year and interest
will be due
•Mandatory filing
may apply
•Mid-November pay
and file extension
•Certainty on notice
of assessment
contents
•Automatic receipts
•Payment not
debited until mid-Nov
if filed early
•Refunds tend to
issue earlier
•Check PAYE Tax Credit
Certs to ensure PT
calculations correct and
no unforeseen
underpayments
•PAYE Anytime tab
•Review NOA on receipt
to ensure 30 time limit
for appeal not missed
•Establish reason for
under/overpayment
Professional & Ethical Skills
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•
Module 2 professional approach
Income Tax/USC/PRSI= high risk 55%
Tax compliance and consulting
Research should be rigorous
Excellent communication skills require
Review competency issues
Research and Risk Management
Engagement
Payments
Prior Year
Review
Other
•Does the EL
cover the
work?
•Fees agreed?
•Permitted
service?
•ROS
authorisations
signed?
•Previous Year PT
sufficient?
•Reconciliation of
under/overpayment
carried out?
•New clients –
copies of P/Y
Tax Returns
and
computations?
•Is file up to
date?
•Check P/Y
income tax
compliance for
background to
consultancy
work
•Good checklists
•Reliable systems
of control for tax
compliance
•Research
planning
•Third party
assistance
•Other taxes
•Analysis of errors
to learn from
Communication Skills
•
•
•
•
•
Adapt standard letters for client
Form of communication?
Regular meetings with clients
Revenue submissions – RM policies
Written communications – language and
conclusions
• Communications based on current tax law
and Revenue practice
Professional Obligations
• Ethical Values
• New engagement – professional
clearance
• Rules for Professional Appointment
• Competency Issues
• Obtain ex client permission to discuss
affairs with new agent
Module Round Up
• Residence, ordinary residence and
domicile
• Calculate income liable to Irish tax
• Remittance basis
Module Round Up
• Income sources and categories
• Schedule D, Cases I/II, Case III, Case IV,
Case V
• Capital Allowances
• Schedule F
• Schedule E
• Employed v Self Employed
Module Round Up
•
•
•
•
•
Calculation of Income Tax liability
Personal credits and deductions
PRSI and USC
Joint, Single and Separate Assessment
High Earner Restriction
Module Round Up
• Self Assessment System
• Preliminary Tax calculation
• Advising client on the correct amount to
pay
• Paying and filing on time
• Completion of Income Tax Return
• Mandatory eFiling
Module Round Up
•
•
•
•
Risk Management issues
Communication Skills
Professional Obligations
Ethical Values