Kieran Coughlan: Talk to Revenue early about cashflow issues due to flooding
Midleton bore the brunt of flooding from Storm Babet. Picture: Guileen Coast Guard
Storm Babet had left a mark, most notably on the town of Midleton but also in surrounding areas, and separate flooding has occurred in West Cork, Wicklow and further afield.
The Revenue's Collector General Joe Howley last week encouraged businesses who are affected by recent flooding events to contact Revenue as soon as possible with a view to working through cashflow difficulties that businesses might be facing in meeting their tax obligations.
The types of arrangements Revenue can put in place include temporary stops in collection, informal instalment arrangements and formal phased payment arrangements.
Active engagement by taxpayers is being encouraged by Revenue and accountants and tax consultants would echo that sentiment. Ignoring a tax liability is not a great strategy.
Revenue has just recently in a separate briefing reminded taxpayers it is their intention to apply interest on overdue Vat, and of course interest also applies on all other overdue taxes.
As such, ignoring a tax liability can result in an accumulation of interest, but late filing penalties can also apply, and Revenue’s systems are set up to automatically escalate non filed tax returns, usually on an initial basis via reminders, warning letters, referral for sheriff collection and enforcement.
A temporary ‘stop’ can be placed by Revenue on collection of taxes and will avoid a case becoming escalated — the stop is agreed by the taxpayer or their accountant/tax agent with Revenue and a prearranged date is agreed by which the stop ceases to take effect and the taxpayer is expected to have brought their affairs up to date at that stage.
Usually 'stops' can last from a few days to a few weeks and possibly longer in more exceptional cases. Informal arrangements usually last a couple of months up to a maximum of six months and deal with smaller debts.
A simplified payment arrangement facility can be put in place for debts of €5,000 or less, whereas for larger debts a taxpayer may need to furnish fuller details of their incomes, expenditures, assets and liabilities and apply formally through an application process.
Within a phased payment arrangement, a taxpayer must commit to meeting their agreed repayments or the phased payment arrangement will be withdrawn and the taxes will become due.
Taxpayers should also agree in advance as to whether they will need tax clearance from Revenue. Filing returns on time, even where the taxpayer does not have the funds available to meet their liability is a key step which can avoid late filing penalties, and also demonstrates that a business is not ignoring its liabilities, and in such instances a taxpayer should also ensure they themselves or their agent follows up with Revenue asking for a temporary stop, and putting Revenue on notice of their intent to follow up with an agreeable arrangement.
Revenue advises that taxpayers who are facing cashflow difficulties and related tax payment difficulties due to the disruption caused by Storm Babet should contact the Collector-General’s office on 01 738 3663 to agree a mutually suitable payment arrangement.
