Taxpayers to get a second chance online

Self-employed people who did not get around to filing their returns with the Revenue by the end-October deadline have a second chance.

Tardy taxpayers can register with the Revenue's online service and give themselves a three-week window to get their affairs in order. But they better move fast. The registration process can take up to eight days, according to the Revenue Online Service (ROS).

Mr Fred Kerr, a tax partner at Ernst & Young, says the extra time granted by the online service can be extremely useful, especially for people who incur capital gains towards the end of the tax period.

This year, that is particularly relevant for people facing capital gains tax bills. Traditionally, capital gains due in one tax year had to be paid by October 31st of the following year.

However, the Minister for Finance, Mr McCreevy, has this year changed the rules so that the October 31st deadline applies for capital gains incurred up to the end of the previous month, with any gain made in the last three months of the year due by January 31st of the following year.

"You can get people who have capital gains tax issues arising at the end of September and they are expected to file a computation and the actual tax due by the end of October," Mr Kerr said.

"That can be impossible at the time and the extra three weeks granted by the ROS is invaluable," he added.

"It all depends on the complexity of the transaction. With capital gains, there can at times be problems working out the gain. We have had cases in here where we have had to undertake two days of calculations to prove that the client in fact had no liability.

"But, in more routine cases, there is no reason why the work cannot be done online. Overall, it is probably particularly good for the accuracy of computations."

ROS has been up and running for three years. Over that time, it has gradually increased the range of taxes that it can handle.

This year, it has passed several milestones. The total amount of tax collected through this outlet has topped €10 billion and business this year has doubled the activity in 2002.

Mr Kerr is not surprised. "You get people of a certain age, people like me even, who do not trust the idea of filing tax returns on computer.

"ROS business will improve as younger people start using it. They are a more computer-friendly generation and, increasingly, they are coming into the ambit of Revenue returns."

ROS has set a target of having 50 per cent of tax returns filed online by 2005.

People using the system can pay their tax bills with a laser card, by direct debit or via online banking. The Revenue guarantees not to take the payment until the date specified by the taxpayer.

However, the three-week online dispensation only applies to those taxpayers who file and pay any tax due by November 21st.

The ROS service may leave a paperless trail but Mr Kerr strongly advises anyone using the system to make sure they have a hard copy backup of whatever is submitted.

Another advantage he sees in the system is that taxpayers can fill out their forms online as they are ready and send the whole lot once they are complete, rather than getting everything together at one time for a paper form.

"For straightforward business, the online service is a great option to have available," said Mr Kerr.