Revenue Note for Guidance

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Revenue Note for Guidance

1080A Interest on overdue tax – supplementary provisions

Summary

This section provides for a reduced interest rate of approximately 3% per annum to apply from 01 August 2020 to taxes declared and owing to Revenue which are the subject of a payment agreement between the taxpayer and the Collector-General. The section applies to agreements currently in existence and where application to make such an agreement is made before 30 September 2020.

Details

(1) A number of terms used in the section, including “the Acts”, “declared liabilities”, “period of delay” and “tax”, are defined.

(2)(a) & (b) Where a taxpayer has reached an agreement with the Collector-General to pay outstanding liabilities under the “care and management” provisions of the TCA or enters such an agreement before 30 September 2020, they may avail of a reduced interest rate of 3%.

(3) Normal interest rates that apply to overdue taxes and duties are disapplied where an agreement in respect of payment of such declared taxes is made or applied for on or before 30 September 2020.

(4) Where an agreement has been reached on or before 30 September 2020, interest calculated in accordance with the formula set out in subsection (5) is charged from the 01 August 2020 (for existing phased payment arrangements) or where an agreement is not reached until after 01 August, then the date that agreement is made.

(5) Subsection (5) sets out the formula for the calculation of the reduced interest. It is calculated by reference to the number of days for which the tax remains unpaid beginning on 01 August 2020 or the date the agreement is made with the Collector General, at a rate of 0.0082% per day or part of a day.

(6) Where a person, who has entered into an agreement with the Collector General under subsection 2, fails to comply with the terms of that agreement, one of the interest provisions disapplied in subsection (3) will reapply with effect from the date of the breach of the terms of the agreement.

(7) The interest is paid gross (that is, it is not subject to deduction of tax on payment) and is not allowed as a deduction in computing for tax purposes any income, profits or gains. The interest is deemed to be a debt due to the Minister for Finance for the benefit of the Central Fund and is payable to the Revenue Commissioners.

(8) The machinery for the recovery of tax charged and the rules of court relating to the recovery of tax apply to the recovery of unpaid interest as if such interest were part of the tax. In addition, unpaid interest ranks equally with unpaid tax in relation to priority of debts in bankruptcy or liquidation proceedings.

(9) In any proceedings for the recovery of interest, a certificate signed by an officer of the Revenue Commissioners stating that the amount of interest is due is evidence that such amount is due until the contrary is proven. Any certificate that purports to be so signed may be submitted in evidence without proof and is deemed to have been so signed until the contrary is proved.

(10) In certain circumstances, the reduced interest rate provided for in subsection (2) shall not apply to unpaid taxes where certain proceedings for the recovery of that tax have been initiated. These proceedings are those initiated under section 960I (civil proceedings taken by the Collector-General in any court to recover outstanding tax), section 960L (issue of a certificate to the sheriff or county registrar by the Collector-General in relation to the collection of outstanding tax) and section 960M (bankruptcy proceedings taken by the Collector-General), and cases where a court judgment has issued, together with a court order determining how the liabilities are to be paid.

Relevant Date: Finance Act 2020