Difficulty meeting tax liabilities?

In these tough economic times cash flow problems are at an all time high and are in turn causing great concern for taxpayers patricularly during tax deadline time.

Dealing with your tax affairs is crucial. With the income tax deadline 2012 around the corner, you must file your return on time and pay what liabilities you owe – if you do not do this you could face interest and penalties.

However if you feel that you will not be in a position to pay your liabilities the following tips may help;

• Get your return processed in good time. Get your tax advisor to calculate your liability as soon as possible. In doing so you will be aware of what liabilities exactly you owe and you can plan how to settle them.
• FILE, FILE, FILE... If you are in the self assessment system you must make sure you file your outstanding tax return even if you are unable to pay the liabilities in full. Failure to file the return on time will result in a late filing surcharge on the return as well as interest accruing on the unpaid taxes due.
• If you find that paying the balance of tax for 2011 and the preliminary tax for 2012 is out of your reach, prioritise and ensure you pay the balance for 2011. If this balance for 2011 is not paid by the deadline Revenue will issue demand of payments. You are obliged to pay preliminary tax however if you are not in a position to pay the full amount of preliminary tax due at this time you should try and an amount on account as soon as possible. As always interest penalties and surcharges may apply for late payments.

If you find yourself in a position where you cannot pay the balance for 2011, you should contact Revenue as soon as possible. Revenue may agree for you to enter an instalment arrangement with them. If you find yourself in such a situation the following points may be of some help;

• When your return has been filed you or your tax advisor should contact Revenue – the Collector Generals Office promptly.
• Make yourself familiar with Revenue’s instalment arrangement procedure – this is available on their website www.revenue.ie and search “The Case Decision Escalation Framework”.
• Keep in mind you are being charged interest so the quicker you clear the liability the better.

Contact Niall Dempsey OSK Tax for further information.