1084 Surcharge for late returns

Summary

This section imposes a surcharge on any taxpayer, individual or corporate, for the late filing of a tax return.

The surcharge is based on a percentage increase in the total tax payable for the year for which the return is late and is subject to a grading of the surcharge by reference to the length of the delay in filing as well as being subject to an overall cap on the level of the surcharge.

With effect from the date of the passing of the Finance Act 2014, a taxpayer will not be liable to a surcharge where a penalty is applied under section 1077E for the deliberate or careless making of an incorrect return provided the return was made in a timely manner in the first instance.

Details

Definitions

(1)(a) “chargeable person” is a person who is a chargeable person for the purposes of Part 41A (that is, a person within the Self Assessment system).

“return of income” is a return, statement, declaration or list which a person is required to file with the inspector on foot of a notice under one or more of the specified provisions. It specifically includes a return which a chargeable person is required to file under Chapter 3 of Part 41A (that is, a Self Assessment return).

“specified return date for the chargeable period” has the meaning set out in section 950A.

The “specified provisions” are —

• Section 877: Returns by persons chargeable
• Section 878: Persons acting for incapacitated persons and non-residents
• Section 879: Returns of income
• Section 880: Partnership returns
• Section 881: Returns by married persons
• Section 884: Returns of profits
• Section 888(2)(a) and (d): Returns, etc by lessors, lessees and agents
• Section 1023: Application for separate assessments.

“tax” is income tax, corporation tax or capital gains tax, as the case may be.

Failure to make a return

(1)(b) The following different sets of circumstances explain what is regarded as a failure to make a timely return of income where a return of income is purported to have been made —

• (1)(b)(i) in a case where a person deliberately or carelessly delivers an incorrect return on or before the specified return date, such a person is regarded as having failed to deliver the return on or before that date unless the error contained in it is rectified before that date,
• (1)(b)(ia) in a case where a person who is in accordance with regulations made under section 917EA required to make a return electronically and who before the specified return date for the chargeable period makes that return in a form other than an electronic one, the person is regarded as having made an incorrect return unless the person before the specified return date for that chargeable period actually submits the return electronically,
• (1)(b)(ib) in a case where a person delivers a return of income and fails to include on the return details which are required to be included in relation to certain specified exemptions, allowances, and reliefs which the return indicates are to be included on the form, such person is regarded as having failed to deliver the return on or before the specified return date, unless it can be shown that after the filing of the return it had been brought to the taxpayer’s attention that the details required had not been included on the form and the person rectifies matters within a reasonable time. The surcharge, if applicable, will be without prejudice to any other event which might give rise to a surcharge under this section (e.g. a fraudulent return) and will always be the 5% one which applies where a return is filed late but within a period of two months of the filing date,
• (1)(b)(ii) in a case where a person delivers an incorrect return on or before the specified return date but does so neither deliberately nor carelessly and it comes to the person’s notice (or to his/her personal representative’s notice if he/she has died) that the return is incorrect, such a person is deemed to have failed to deliver the return on or before that date unless the error in the return is remedied without unreasonable delay,
• (1)(b)(iii) in a case where a person delivers a return on or before the specified return date but the inspector being dissatisfied with it requires the person by written notice served on that person under section 900 to do anything (for example, furnish further information, documentation, etc), such a person is deemed not to have delivered the return on or before the specified date unless the inspector’s requirements are met within the time specified in the notice.

Application for capital gains tax purposes

(l)(b)(iv) The application of the section to capital gains tax is ensured by providing that references to such of the specified provisions as are applied, subject to any necessary modification, in relation to capital gains tax by section 913, are regarded as including references to those sections as so applied.

The surcharge

(2)(a) Where a person is required to deliver a return of income to an inspector and fails to do so on or before the specified date, the amount of tax for that year of assessment or accounting period which is or would be contained in an assessment to tax made or to be made on the person concerned is to be increased by a surcharge amount equal to —

• 5 per cent of that amount of tax, subject to a maximum of €12,695 extra tax for delays in filing of less than 2 months, and
• 10 per cent of that amount of tax, subject to a maximum of €63,485 extra tax for delays in filing of 2 months or more.

Where the tax contained in the assessment to tax is not the amount of tax as increased by the surcharge, the provisions of the Tax Acts and the Capital Gains Tax Acts, including in particular those relating to the collection and recovery of tax and the payment of interest on unpaid tax, apply as if the tax contained in the assessment were the amount of tax as increased by the surcharge. However, these collection and enforcement mechanisms will not apply in a case where the surcharge arises for the non-completion of the specified details in relation to exemptions, allowances, etc. on the tax return form. This means that such a surcharge will be included in an assessment and will as a consequence be capable of being appealed to the Appeal Commissioners.

(2)(b) In determining the amount of the surcharge the tax contained in the assessment is deemed to be reduced by the aggregate of —

• any tax deducted by virtue of any of the provisions of the Tax Acts or the Capital Gains Tax Acts from any income, profits or chargeable gains, charged in the assessments to tax in so far as that tax has not been repaid or is not repayable to the chargeable person and in so far as the tax so deducted may be set off against the tax contained in the assessment to tax, and
• any other amounts which are set off in the assessment to tax against the tax contained in the assessment.

In effect, in applying the surcharge any tax which is or has been paid by deduction (for example, PAYE tax) or any amounts which are set off against the tax in an assessment reduces the amount to which the surcharge is to be applied.

Directors

(3) A director within the meaning of section 116 or a person who is jointly assessed to tax under section 1017 or 1031C whose spouse or civil partner is a director within the meaning of section 116 is not entitled to have a credit for tax deducted at source under PAYE (as allowed by subsection (2)(b)(i)) taken into account to reduce the amount of tax to be surcharged. The effect of this provision means that a surcharge is imposed even where the director pays tax under PAYE.

New businesses

(4) In the case of a new business the surcharge provisions of this section only apply to delays in filing from the second filing date of the business. This concession does not apply to new businesses where the promoter or owner has an existing business or where that person’s spouse or civil partner has an existing business in respect of which both spouses or civil partners are jointly assessed to tax.

Application of surcharge to preliminary tax

(5) These “surcharge” provisions for late filing of returns apply to an amount of preliminary tax paid under Chapter 7 of Part 41A in the same manner as they apply to an amount specified in an assessment.

Relevant Date: Finance Act 2021