Monday, March 11, 2013

What Self-Employed people need to know about the Local Property Tax

Perhaps having learned some lessons from the high level of resistance to, and non-payment of, the Household Charge, Revenue have approached the issue of taxpayer compliance to the new Local Property Tax (LPT) differently and have made every effort to ensure this tax will be collected.

It is crucial for self-employed persons to be aware of how the provisions of the LPT may affect them. Hugely important to take note of is the fact that Revenue has linked the submission of a LPT return to the submission of annual income tax returns.

As you will probably be aware, a late filing surcharge applies if you are late in filing your income tax return. This surcharge is calculated as a percentage of your tax liability. A 5% surcharge applies where your income tax return is submitted no more than 2 months after the deadline. This increases to 10% where the return is more than 2 months late.

Revenue has now linked the late filing of a LPT return to the filing of an income tax return. This means that if you do not file your LPT return, your income tax return will be deemed to have been filed late, even if it was not. This will trigger a late filing surcharge to be raised on your income tax return.

No tax clearance certificates will be issued to individuals where there is an unpaid LPT. If you need a tax clearance certificate to be able to deal with certain customers (such as under a Public Sector contract), you will need to be very conscious of the impact that non-payment of the LPT could have on your business.

If you are due any other type of tax refund, unpaid LPT may be offset against your refund.

If you are in receipt of any kind of social welfare payment, the LPT may be deducted directly at source from the payment.

As will also be the case with PAYE workers and other individuals, the Revenue now also has the power to attach the amount of LPT due to your bank account. This means that they have the power to take unpaid tax amounts directly out of the bank accounts of people who do not pay the tax, by ordering a bank to hand over the money from the person’s bank account.

Finally, as will be the case with all property owners, PAYE or self-employed, unpaid LPT will be added as a charge to your property. This means that you will not be able to sell your property until you have paid all LPT outstanding on it, plus interest due and also penalties where appropriate.

It seems that the Revenue has put a lot of thought into ensuring compliance with the LPT. There are very few places for people to hide and costly consequences for those who may try.

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