SOLE TRADER

Damiend84

If your a sole trader and you've messed up your books in your first year or so.
If they didnt have the money to pay the tax owed what are their options?

Damiend84

If you cant help dont reply

Duck Soup

I've been a sole trader for about 10 years and can only advise you from my own experiences.

First off, when you say "messed up your books" - which is kind of vague - with sole traders that tends to mean things like (a) didn't add VAT onto an invoice or (b) put VAT onto the invoice, but didn't pass the VAT money onto the Revenue Commissioners along with the quarterly VAT form or (c) [and this is a very common one] didn't put enough money by to pay the end-of-year tax bill. In other words, you earnt it and then spent it.

In truth, it doesn't much matter what the problems are, the solution is always the same.

In simple terms, there are two elements to the solution. The first is to get an accountant. For annual tax returns, this isn't optional. Your accounts need to be signed off by a registered/certified accountant before the Revenue Commissioners will accept them. Even if you've done every calculation correctly yourself, you still need to get a certified accountant to sign your tax declaration to the Rev Comms. If your accounts are a mess, so much the better. Bring every scrap of paper for purchases, expenses, bank statements etc and have the accountant sort them. More expensive, but much quicker than unravelling the knots of your year's trading yourself.

Talk to your friends who are either sole traders or have their own companies about getting an accountant. Good ones can save you a considerable amount of money. And legally you need one to sign off your annual accounts anyway. So start by getting that sorted out.

The second part to it is that once your audited accounts have gone in with a certified accountant's signature okaying them, then the Revenue Commissioner will send a letter/statement back saying how much you owe in tax to the last penny. Typically, there will also be a cover letter with a name and direct number of someone in the Revenue Commissioners dealing with your case. They don't demand immediate payment, but they do expect you to have figured out a repayment schedule.

So, for example, the statement comes back and it says you owe €3,600 in tax for your income in 2013. Look for the name and contact number dealing with your case. Call them and explain that you're going to set up a Direct Debit - or walk into the bank every month or send them a cheque every month, there's a load of different ways - to pay back €300 a month for 12 months. Or €600 a month for 6 months. Personally, I got 24 months to pay back a particularly hefty annual tax bill from a few years ago.

So those steps again:

1. Get all your paperwork together.
2. Suss out a good accountant and leave it all with him or her.
3. Accountant sends your annual income statement (a.k.a. tax return) to Revenue Commissioners.
4. Revenue Commissioners send you back a tax bill.
5. Look for the contact name in the cover letter with your tax bill.
6. Call the Rev Comm person looking after your case with a clear idea of a repayment schedule.
7. Pay it back over a number of months or even a couple of years.

The attitude of the Revenue Commissioners is vastly different to what it was a few years ago. They used to be bullet-headed and borderline bullying. These days I think they understand that many people are in dire financial straits and - while still formal and businesslike - are okay to deal with as long as they think you're sincere and have a clue.

Good luck.

Duck Soup

PS. Even if you've put in your annual tax return, same process applies - just pick it up from point (5).

Sort out a repayment schedule. Call your Revenue Commissioner contact. Pay back the money in agreed installments.

Initially, you will get a verbal agreement on the phone for your repayment schedule and then a written letter confirming it and mode of payments.

It's then up to you to keep up payments.

Damiend84

Hi,

Thanks for your info just finding out info for a friend of mine who's in a bit of trouble. Much appreciated your reply has been a big help.

Gloomtastic!

Duck Soup wrote: »

The first is to get an accountant. For annual tax returns, this isn't optional. Your accounts need to be signed off by a registered/certified accountant before the Revenue Commissioners will accept them.

This is not true. As a sole trader you can file your own tax return without the need of an accountant/auditor.

OP, how much do you think you've got your tax wrong by? €100's, €1000's or €10's of 1000's?

Peterdalkey

I noted that error too, but given the trader was in such bother, the chances were pretty overwhelming that he would need an accountant to sort it properly and for the offering be acceptable to Revenue! The DuckSoup posting was so on the money and helpful, I felt that though incorrect, it might be seen as being picky. Now finished praising my self-restraint, Gloomtastic is quite correct and we do need to consider the needs/guidance of those who happen upon this thread for other purposes.

I would also note that the OP was posting as a concerned friend of the non- taxpayer