THE PERSONAL RETURN

2012 is whizzing by. We’re already nearing the end of May and, while four months might sound like a long time in business, the October 31 deadline for the filing of personal tax returns is starting to loom large. Even with the typical ROS extension to November 15, filing the return isn’t something you can put off forever.

 

Ideally, people should start the process as early as possible in the following year. At DCA Accountants and Business Advisors, we like to try and start the process off around June. It’s good practice to follow up with your accountant in the next week or two looking for a checklist of what documents you need.

 

The vast majority of the hunting will be in receipts. If you’re a naturally disorganised person, you’re leaving yourself exposed to a higher tax bill by not holding on to your receipts or payment details. There are a lot of things out there that people may not be aware that they’re entitled to claim. Examples include medical expenses, bin tax credits, subscriptions for trade unions or other organisations, charity donations, and college or course fees that are relevant to your work.

 

Even if you don’t have receipts for everything, you shouldn’t give up. You can look at bank statements to see what’s paid out of the account, or you can look at cheque stubs. For items like insurance, subscriptions and things like that, it’s often the case that people don’t hold on to the receipts, but they’ll have the record in their chequebook. If you can’t locate the receipts, you can follow up with the provider. Many of these places will give you the supporting information you need by email. The key thing is to give yourself enough time to discover what back up receipts you have and what you don’t have. That way, you can email people to supply a copy of the receipt. If you’re not able to get your hands on receipts but you’re comfortable that, if push came to shove, you’d be able to stand over those payments, give the accountant the estimate of what you paid amounts.

 

Aside from not declaring everything they’re entitled to, many people make the mistake of under-declaring income. For example, some people might have income from a salary, but they might also have arranged to charge the company directors fees. It often happens that, when filing their return, they don’t bring these fees into their personal tax return. That can result in underdeclared taxes and possible penalties or charges from the Revenue.

 

The biggest mistake you can make, though, is filing and paying late. The Revenue will be quite happy to take a surcharge of up to 10% on anything paid late, and interest on top of that. Sometimes, people don’t pay preliminary tax – a tax you must pay before the year expires. Many people miss the boat on that – either they’re unaware or they turn a blind eye. But the Revenue can and will penalise you. The rule here is that preliminary tax must equal 100% of your previous liability, or 90% of your expected liability for 2012.

 

More to the point, filing and paying late can draw attention that nobody wants. The Revenue tries to narrow down the businesses they select for an audit. One thing that can bring a business to their attention is where they’re late with filing their return and late paying their return. By doing that, you’re increasing your chances of being audited.

 

If you genuinely are struggling to meet your deadlines, it is worth getting in touch with the Revenue as soon as possible. It won’t guarantee that you’ll avoid a penalty, but it depends on each case. The Revenue can be understanding of a late return if the circumstances are genuine. If there’s a bereavement or an accident, they might take that on board and allow you some breathing room. In any case, it’s always good to approach them first. It’s even better, though, to get the filing process started well in advance so you’re not put in that position.

 

Declan Dolan,

Partner,

DCA Accountants & Business Advisors.

 

For more on our services or to receive a free consultation for your business from one of our experts, visit www.dca-ireland.ie or follow us on Twitter.