The new Pay and File system may simplify things for the self-employed, writes Laura Slattery. If you cannot find an accountant to take on another client and the thought of working out your adjusted net profit is too depressing, you could always consider a change of career.
Halloween has taken on a new significance this year. For more than 360,000 self-assessed taxpayers, the most frightening thing about October 31st is neither the prospect of impromptu bonfires nor fireworks exploding in the middle of the night. It is that this date, now less than two weeks away, marks the day by which preliminary tax for the current year and the balance of tax in respect of the previous year must be paid.
If you are one of the 360,000plus self-assessment customers of the Revenue and you have not called your accountant recently, you are either an early filer, with all taxable income for the accounting period in question long since calculated, or so laid back that even the threat of interest penalties and surcharges on top of what is probably already a hefty tax bill is not scary enough to break your leisurely stride.
According to the Collector General, Mr Liam Irwin, the introduction of the Pay and File arrangements this year marks the single biggest change to the income tax system for self-employed people since the introduction of self-assessment.
It might not seem so if you are still fiddling with receipts, invoices and indecipherable balance sheets, but the Revenue says Pay and File will bring major advantages and simplifications to the self-assessed system, streamlining filing and payment obligations for customers and their agents.
When the tax year ended in April, the filing date for returns was the following January 31st. But since the tax year has been aligned with the calendar year, self-assessed taxpayers must file a return on or before October 31st, 10 months after the end of the tax year.
October 31st, 2002, is also:
the payment date for any balance of tax owed on the short tax year - 2001;
the due date for any capital gains tax owed for 2001;
the payment date for preliminary tax ("payment on account") for the current tax year, 2002.
Under Pay and File, tax returns are accompanied by a payslip, so self-assessed Revenue customers can file their return and pay tax in one go. A new payment option, Single Debit Authority, is also available, allowing taxpayers to have their net tax liability debited directly from their bank accounts.
The Revenue says the easiest, cheapest and most efficient way of doing business with it is through the Revenue Online Service (ROS), at www.ros.ie.
Up to the end of September, €4.5 billion in tax has been paid through the service since it was established in September 2000, according to a spokeswoman for the Revenue Commissioners.
ROS has 10,200 fully registered customers, says the spokeswoman: some 2,440 of these are tax practitioners, with a "potential" customer base of 270,000 people.
Registering as a ROS customer may take up to two weeks to complete. Taxpayers visiting www.ros.ie apply for a personal access number called a RAN, which is posted to them by land mail. They then input the RAN on the site and receive a password, which is also posted out. The customer can then receive a "digital certificate" by entering this password on the site.
The Revenue says there are other benefits to ROS, such as instant access to personal tax payment records, and recommends people register even if they don't want to file electronically this year.
But self-assessed taxpayers who do use ROS to pay and file their income tax will have a few more weeks' breathing space after the October 31st deadline.
To ensure the smooth introduction of the Pay and File system, several transitional arrangements are in operation this year. ROS customers, as well as paper filers whose total liability is less than or equal to €5,000 and who pay by Single Debit Authority, have until November 21st to pay and file.
Candidates for self-assessment who miss the deadline by less than two months will be charged 5 per cent of the tax due, up to a maximum of €12,700. After that, a 10 per cent surcharge is due, up to a maximum of €63,500. On top of these fines, interest penalties amount to about 1 per cent a month. If you cannot find an accountant to take on another client at the last minute and the thought of working out your adjusted net profit, not to mention all those reliefs, credits, allowances and expenses that will make the final bill less scary, is too depressing, you could always consider a change of career.
Ditch the suit in favour of a paintbrush, keyboard or bare hands, apply your creative side to more than just your tax return and you could, in theory, qualify for an artists' tax exemption.
As of September 30th, 2002, more than 5,300 individuals have been approved by the Revenue for the exemption. Of the 191 approved during 2002, 125 are visual artists - either painters or sculptors - some 54 are writers and 12 are musical composers.
Certain royalties from works such as books, plays, musical compositions, paintings (or other like pictures) and sculptures are exempt from tax under the scheme, although a return must be filed every year.
And the work has to be defined as original and creative by the Revenue.
