Tracking your Direct Debit to Revenue

From a cash management and administrative perspective, the Direct Debit method of paying your taxes is the most simplistic way to ensure your taxes are being paid on time. This reduces the burden of filing monthly Returns,  however, you still have to file an annual return for both PAYE and VAT

Many business owners believe that, because they pay their PAYE and VAT on time every month by direct debit, the Revenue will not charge Interest and Penalties. However this is only the case in the situation where a shortfall in annual payments does not arise. In the circumstance where insufficient amounts are paid by direct debit and as a result the balance of tax payable with the annual P35 (for PAYE) and the annual VAT return is more than:

• 20% of the annual liability for VAT
• 10% of the annual liability for PAYE

then you will be liable to an interest charge backdated to the mid point of the year. In effect the balancing payment is treated as having been due six months earlier and therefore an interest charge arises.

In order to avoid such Interest and Penalties being imposed it is important that you:

• Review your current Direct Debit payments to ensure that you are paying sufficient tax each month to avoid an interest charge.
• File your annual employers  P35 on time (by 15^th February following the tax year end)
• File the annual VAT return and the annual return of trading details

 For further information please contact Imelda Prendergast.