Income tax requirements

Baby01032012

Id appreciate any advice you can offer.

I'm a PAYE worker. I'm registered on MyAccount/PAYE Anytime. I've always completed a Form 12. For 2017 I had additional non PAYE income of 10,000, this was from a family member for managing property on their behalf. I naively thought i could declare it on my Form 11 through PAYE anytime. I had also made a pension contribution of 10,000 in order to reduce exposure to the additional income tax on the extra income.

When my Form 11 was processed and i received my P21 balancing statement I noticed that a large repayment was due to be paid. I rang Revenue at the time who advised that the additional income was not processed on the Form 11 as it was greater than 5,000, that i would have to register for income tax. I got them to stop the repayment until the additional income was declared.

I've registered now for income tax, received my ROS login and completing the Form 12 for 2017. My questions are - am i now looking at a 5% surcharge as i am late in filing form 12 for 2017 even though i thought i was ok declaring it on the Form 11? Also, Im filing in form 12, all i want to do is submit the 10,000 but am i required to submit accounts? I'm not a sole trader or running a business - although that may change within next year - just looking to declare the additional income from family for 2017.

Thanks for any advice.

Bold Abdu

There will be no surcharge. As you registered for IT in 2017, your F11 is not actually due til 31/10/19, so it's not late yet.

Also, you will undoubtedly have some expenses to deduct from the €10K income. Make sure you do.

Baby01032012

Many thanks bold abdu I guess it gives me time to read up on my obligations.

Geuze

You seem to be confusing the forms.

Form 12 is the simple form, for smaller non-PAYE income.

FORM 11 is the more complex form, for extra net incomes more than 5k.

Form 11 is through ROS, I think.

Baby01032012

Thanks Geuze..I see now I did confuse the forms. Form 12 I had been submitting for PAYE. Form 11 is the one I will be filing in.

Baby01032012

Bold Abdu wrote: »

There will be no surcharge. As you registered for IT in 2017, your F11 is not actually due til 31/10/19, so it's not late yet.

Also, you will undoubtedly have some expenses to deduct from the €10K income. Make sure you do.

Are you sure 2017 form 11 deadline is 2019 I’ve read it was 31/10/18 or 14/11/18 if you file electronically.

Baby01032012

A follow up question from the OP.

Im looking to file my Form 11 for 2017 now - late. I guess i will incur penalties.

My question is can i claim e-worker relief as a sole trader? €3.20 per day. This is nearly the only expense i am claiming. I would have done all work for my sole trade income from home and my PAYE job would have been in my employers offices.

wiggle16

I think there has been some information mixed up by typos. Yes, your form 11 for 2017 is now late. If you file it before 31/12/2018 you will automatically incur a surcharge of 5% - if you leave it til after that, the surcharge will be 10%. So file it right away.

IF you submitted the form 12 though myaccount ("PAYE anytime") BEFORE 31/10/2018, then if I were you I would write to Revenue and ask for the surcharge to be removed based upon the fact that at the time you did the form 12 you were not registered for income tax, and were only registered after the pay and file date had passed. They have the discretion to remove a surcharge if they deem it inappropriate, so you have nothing to lose by asking.

In response to your second question....... what is e-worker relief??

relax carry on

Baby01032012 wrote: »

A follow up question from the OP.

Im looking to file my Form 11 for 2017 now - late. I guess i will incur penalties.

My question is can i claim e-worker relief as a sole trader? €3.20 per day. This is nearly the only expense i am claiming. I would have done all work for my sole trade income from home and my PAYE job would have been in my employers offices.

E-Worker relief relates to a tax free payment of 3.20 euro per day by an employer to an employee. It doesn't relate to Sole Traders.

You are a sole trader providing some sort of service. How can you not have any expenses? What is it you do and do you have more than one client. Is there a chance that you should be an employee of the client not a sole trader providing a service to the client.

Grolschevik

relax carry on wrote: »

Is there a chance that you should be an employee of the client not a sole trader providing a service to the client.

If this were the case, what might be the implications?

relax carry on

Grolschevik wrote: »

If this were the case, what might be the implications?

The employer must adhere to below when entering into contracts of/for.

https://www.revenue.ie/en/employing-people/becoming-an-employer-and-ongoing-obligations/guide-to-pay-as-you-earn-paye/determining-the-employment-status-of-an-individual.aspx

Revenue can reclassify those who are obviously employees.

Grolschevik

relax carry on wrote: »

The employer must adhere to below when entering into contracts of/for.

https://www.revenue.ie/en/employing-people/becoming-an-employer-and-ongoing-obligations/guide-to-pay-as-you-earn-paye/determining-the-employment-status-of-an-individual.aspx

Revenue can reclassify those who are obviously employees.

And in circumstances where the worker ticks almost all of those boxes for "employee", but the employing company insists that they're "self-employed" (and the worker has looked after their own taxes for years in this relationship, etc), what might the possible ramifications for either party be upon Revenue being contacted?

[Apologies for possibly extending this thread to places unanticipated by the OP]

wiggle16

Relax Carry On will probably know better than me but... my understanding is that Revenue can decline to make that determination themselves. Whether or not someone is an employee or not is ultimately determined by the DEASP Scope section - they determine the insurability of employment for PRSI purposes, ie, they will determine what charge to PRSI the source of income is liable for, and since the charges to PRSI differ between employed people and self-employed people, that's ultimately what settles the issue.

As for ramifications... I suppose Revenue will want to make sure that the correct amount of tax has been collected and could amend returns as they see fit if they want to.

CIARAN_BOYLE

the employer can always be hit with fines for incorrect operation of the paye system.

Baby01032012

Thanks to all for the above replies, that was very helpful, much appreciated.

I will write to Revenue re the surcharge as i had returned the amount on the Form 11 - my fault though at the time for not realising as it was greater than 5k i could not use the form 12. I have since registered as a soletrader, registered for ROS so i can make a return for the below income.

Regarding not having expenses - I'm a full time employee in a non related PAYE job. I manage a property portfolio in my spare time for extended family members. In 2017 I received €10k for this work. I dont have expenses in that I use my own mobile phone, any work i do i use my personal laptop, printer and in my own home, i use my own car etc., so really have no expenses. Although I plan to apportion 20% of light and heat and petrol and motor tax which i think is reasonable - car insurance and broadband in my wife's name. As i cant claim travel subsistence or e worker relief.

Keithod11

wiggle16 wrote: »

I think there has been some information mixed up by typos. Yes, your form 11 for 2017 is now late. If you file it before 31/12/2018 you will automatically incur a surcharge of 5% - if you leave it til after that, the surcharge will be 10%. So file it right away.

There is no typo, the return is not late as it's the first return.

Baby01032012

Thanks Keith.

I have tried to search online and all i can find is the 31 October/14 November 2018 deadline for 2017. What is the extended deadline for first returns? Much appreciated.

wiggle16

Keithod11 wrote: »

There is no typo, the return is not late as it's the first return.

I'll be interested to see if the return comes back with a surcharge or if Revenue actually amends the record to indicate that the OP is a new registrant for income tax.

My understanding is that the return should still be filed and not left til 2019, regardless of whether it is deemed late.

wiggle16

Sorry OP, the relevant information keithod is referring to is here: https://www.revenue.ie/en/tax-professionals/tdm/income-tax-capital-gains-tax-corporation-tax/part-47/47-06-02.pdf

I forgot about the grace period for new cases.

Baby01032012

wiggle16 wrote: »

Sorry OP, the relevant information keithod is referring to is here: https://www.revenue.ie/en/tax-professionals/tdm/income-tax-capital-gains-tax-corporation-tax/part-47/47-06-02.pdf

I forgot about the grace period for new cases.

Many thanks Wiggle16. While i wont suffer a surcharge in relation to the 2017 return I note that i should still have paid prelim tax for 2017 by 14 November 2018. Is their then a surcharge for not having paid the preliminary tax on time?

Edit: As i was effectively due a refund per my 2017 Form 12 PAYE return which will be greater than prelim tax due for 2017 am i ok?

Keithod11

If you are due a refund for 2017 then you can't have a preliminary tax liability for 2017 as well? I am not sure I follow you.

Baby01032012

Keithod11 wrote: »

If you are due a refund for 2017 then you can't have a preliminary tax liability for 2017 as well? I am not sure I follow you.

Sorry for my contradictions. I mean on my form 12 without my non PAYE income i was due a large refund based on the P21 issued. Ive since registered for Income tax/sole trader/ROS in order to report my non PAYE income. Ive told Revenue to hold off refunding based on the P21 as I had non PAYE income and i need to file my Form 11. So maybe i should just do that!

wiggle16

There are three options you have when paying preliminary tax. The requirement to pay preliminary tax depends on what liability you have for the year you are filing for and whether you anticipate having a liability in the following year.

In this case, you did a form 12 and got a P21 which indicated you were due a refund. But this P21 did not have your non-PAYE income on it, so it's not a correct reflection of your liability. So for the moment forget about the P21 and the refund.

When you file your return for 2017 (let's suppose you did it tonight) you will end up with one of 3 situations:
a) a liability
b) a refund
c) a nil tax balance, where you neither owe nor are owed money.

You have three options for paying preliminary tax for 2018:
1) 105% of your liability for the year before last (2016, so not an option in your case)
2) 100% of your liability for the previous year (2017)
3) 90% of your estimated liability for the current year (2018)

a) If you filed tonight and had a liability of €100, you can either pay €100 preliminary tax under option (2), or you can pay 90% of what you think you will owe for 2018 (for example, if you've had a good year or a bad year and you think you will have a much bigger or much smaller liability for 2018, you can pay 90% of what you think you'll owe). Either of these satisfies your preliminary tax obligations for (a).

b) If you get a refund, for preliminary tax purposes this means you had a liability of zero. You can pick option (2) and pay no preliminary tax (since 100% of 0 is 0). Or if you think you'll owe money for 2018 you can pick option (3) and pay 90% of it.

c) If you balance, then you've zero liability and it's the same as (b) above.

Sorry for the long post but preliminary tax is notoriously confusing if you're not familiar with it. Basically, if you have a liability, then you have to pay something in order to be compliant with preliminary tax obligations.

There's no surcharge, exactly, for not paying preliminary tax on time. However, if you had a liability of €1000 when filing return for 2017, and paid zero preliminary tax for 2018, then if you have a liability next year when you file for 2018 there may be penalties applied, and the liability is due immediately (ie, you don't have until 31/10/2019 to pay it, Revenue want it there and then, because you didn't satisfy your obligations).

Hope that's kinda clear.

Baby01032012

No I appreciate the long post, time and effort.

Much appreciated wiggle16