Experts urge this Category to file accurate Income Tax Returns & to also Claim any available tax entitlements
Ireland’s black economy is growing and more and more people in certain occupations are by-passing the tax system in favour of carrying out work and endeavouring to hide income from the taxman. However, as the self-employed prepare for the self-assessed tax deadline of October 31st tax experts at www.taxback.com are warning those who do not comply with Revenue obligations that they could end up with significantly higher tax bills than they would have incurred if they had been compliant from the off. Taxback.com say that those who previously worked in the construction industry remain the largest group on the live register and are the group most likely to have become self-employed as a result of the recession but are also unlikely to have ever had to file a tax return.
According to Christine Keily of www.taxback.com , “In August, there were 460,300 people on the live register. Of this sobering number, some 174,800 previously worked in construction, the trades or in manufacturing as operatives. Many of these people are now under pressure to file their own tax return for the first time. Previously many did not have to file a self-assessed tax return because they were in PAYE employment. Although it may be tempting to some to try to ignore their tax filing obligations, particularly those who feel they haven’t clocked up enough hours this year to owe the taxman money, we would advise them that the Revenue are clamping down on those who try to hide earnings and more often than not if the tax return is filed accurately there may only be a relatively small tax bill to be paid – a lot smaller than that which would arise if Revenue applied penalties for non-compliance”.
Christine went on to say, “In the simple example below we have used notional figures to outline how a plumber with turnover of €38,000 in 2011, who incurs €8,500 in business-related expenses, can calculate his final taxable income in order to work out his tax liability”.
Taxback.com outline some of the main expenses which in their experience self-employed tradesmen & women are entitled to utilise in their tax return.
Light and heat €1,500
Taxable Income €29,500
Taxback.com say there is no limit set in respect of the allowable deduction i.e. if a self-employed construction worker incurs expenses in relation to business related mileage etc. these items may be deducted in full from the receipts in order to determine the taxable amount of income. If the expenses are greater than the receipts he has a loss which he can offset against future profits.
Keily advised, “Many people have no experience of doing a tax return and as such are not sure of what items of expenditure are deductible and what income they have to include. But as anyone in the construction industry at the moment will tell you times are tough and every penny saved counts”.
Keily continued, “The recession has seen the re-emergence of the black economy and more and more people, particularly those in the construction industry, now find themselves working outside of the traditional PAYE employment. However, Revenue is aware of this and is taking measures to ensure penalties are imposed on people who fail to declare the entirety of their income. Revenue has the power to impose a broad range of penalties ranging from a surcharge for late submission of a tax return which may be 5% or 10% of an individual’s tax liability depending on how late the return is, to specific penalties for failure to file a return or provide information on request. Penalties for filing a return negligently or fraudulently can be severe as they are based upon the actual tax liability. Furthermore, interest on late payments of tax accrues on a daily basis and can result in significant tax bills”.
Taxback.com is a multi-national corporation providing specialist tax return services to private and corporate clients across 100 countries. Taxback.com was the overall winner of the 2009 Ernst & Young Entrepreneur of the Year Award in Ireland and winner of a Deloitte Best Managed Companies Award in 2011.
Established in Dublin in 1996 and led by a team of entrepreneurial business executives, taxback.com has 27 offices worldwide, in Europe, Australasia, the United States and South America, and a staff of over 670.