258 Returns and collection of appropriate tax

Summary

This section provides for returns, payments and payments on account of DIRT by financial institutions and provides that, in general, the existing provisions for the assessment and collection of income tax, and for the charge of interest on overdue tax, apply with suitable modifications to DIRT. The section provides specifically that DIRT is payable without the necessity for raising an assessment, but provision is made to empower an inspector to raise an assessment if payment is delayed or if he/she considers it necessary to do so because he/she is dissatisfied with the particulars contained in a return.

The payment on account provisions of this section are subject to the alternative method of calculating that payment contained in section 259.

Details

Application

(1) The provisions of this section apply to the collection and recovery of DIRT on relevant interest. Any other provision of the Tax Acts dealing with collection and recovery is, therefore, subject to the provisions of this section in so far as they apply to DIRT.

Returns

(2) A financial institution is required to make annual returns to the Collector-General for each year of assessment of relevant interest paid (or credited) by it in the year and of the DIRT deductible under section 257(1). The return is to be made within 15 days from the end of the year of assessment. Even if a financial institution fails to deduct DIRT from a payment of relevant interest, it would nonetheless be obliged to account in the end-of-year return for the amount of DIRT relating to that payment.

Payments

(3) Payment by the financial institution to the Collector-General of DIRT deductible from the relevant interest must be made by the final date by which the return is to be made (that is, 15 days from the end of the year of assessment). The tax is payable without the making of an assessment but, for the purposes of securing collection of the tax or any interest on the tax, an assessment may be made by the inspector if the DIRT, or any part of the DIRT, due for the year is not paid on time. A payment on account during the course of the year of assessment is provided for in section (4) or, alternatively, in section 259.

The words in brackets, that is, “(whether or not it has been paid when the assessment is made)” apply to permit an assessment to be made where —

• an insufficient amount of DIRT had been paid on or before the due date (that is, within 15 days after the end of the year of assessment), or
• the tax due has not been paid on or before the due date.

Thus, if a bank which owes €1,000,000 for DIRT pays €800,000 in due time, an assessment may be made for the €1,000,000. Collection procedures will then commence in respect of the unpaid balance. Similarly, if no DIRT is paid before the due date, an assessment to recover it may be made even though, before the assessment is made, the full €1,000,000 has been paid. The assessment would be necessary so that interest on the €1,000,000 from the due date to the date of payment could be recovered by the Collector-General.

There is no necessity for a notice of assessment to be sent to the taxpayer if the correct amount of tax has been paid in due time. However, a pro forma assessment may be made to enable monies paid in due time to be brought to account by the Collector-General.

Interim payments

(4) Interim payments on account by financial institutions on foot of DIRT due to be paid by them for a year of assessment are required. [An alternative method which must be used in certain circumstances for calculating the amount of the interim payment on account is provided for by section 259]. The payments on account must be made within 21 days of each of the following dates

• (4)(a) 31 March
• 30 June
• 30 September

(4)(b)(i) The payment on account that must be made within 21 days of 31 March must not be less than the appropriate tax accruing in the period 1 January to 31 March.

(4)(b)(ii) The payment on account that must be made within 21 days of 30 June must not be less than the appropriate tax accruing in the period 1 April to 30 June.

(4)(b)(iii) The payment on account that must be made within 21 days of 30 September must not be less than the appropriate tax accruing in the period 1 July to 30 December.

Any amount on account of appropriate tax paid by the relevant deposit taker for any year of assessment shall be treated as far as may be as a payment on account of any appropriate tax due and payable by it for that year of assessment under subsection (3)

(4)(d) Normally, bank interest is treated as accruing from day to day but in some cases interest may accrue on periodic balances, etc or may not accrue until the end of the month in which money is deposited. In every case, for the purposes of the payment on account, interest is treated as accruing from day to day so that a notional amount, on which the payment on account may be based, can readily be determined.

(4)(e) In the very rare case where the payment on account might exceed the DIRT due for the full year of assessment the excess is carried forward and set firstly against the next payment on account due (that is, for the next year of assessment). Any remaining balance is set against the next payment due for the full year under subsection (3) and so on until the excess is exhausted.

Interest deemed to accrue from day to day

(4A) For the purposes of the return and payment of DIRT under subsection (3), interest is deemed to accrue from day to day (if determinable) and, to the extent that it is deemed to accrue in a year of assessment and is not actually paid in that year, is deemed to be paid on 31 December in that year.

(4B) Such interest deemed to have been paid on 31 December in a year of assessment (the DIRT on which must be accounted for under subsection (3)) may be credited against the DIRT liability of the year of assessment in which the DIRT is actually paid.

(5) The same payment and collection conditions that apply to the payment for the full year apply to the payments on account due under subsection (4). The amount on account of DIRT is to be paid without the making of an assessment.

The annual return of DIRT is to contain particulars of the interest in respect of which interim payments are due for the relevant year of assessment and of the “amount on account of appropriate tax” payable in respect of that interest. A return is required whether or not relevant interest has been paid. This is to deal with the possible situation where payments were due on the accrued basis under subsection (4) but no payment (or return) was due under subsection (3) because no relevant interest had actually been credited in the year.

Assessments

(6) An inspector is authorised to make an estimated assessment where a financial institution has not made a return, or has made a return which includes an incorrect amount of DIRT, or has made a return with which the inspector is dissatisfied. The due date for any tax contained in the assessment is, for the purposes of interest on unpaid tax, to be the date on which the tax should have been paid without the making of an assessment if a correct return had been made in due time.

(7) The making of any necessary assessments, adjustments or set-offs to secure the correct tax liabilities of a financial institution (and, if necessary, of a depositor) is provided for where a return contains any item incorrectly included as a payment of relevant interest. For example, the financial institution might erroneously indicate in a return that DIRT was deducted from interest paid to a non-resident depositor (in effect, the deposit in question would not be a relevant deposit).

(8) While, normally, DIRT is due and payable without the making of an assessment, the due date for payment of DIRT in respect of which an assessment has issued is one month after the issue of the notice of assessment. However, that due date cannot displace an earlier due date which would have been applicable under subsections (3) and (4). If the assessment is appealed, the appropriate earlier due dates continue to apply. Any tax overpaid on determination of an appeal against such an assessment is to be repaid.

Collection, etc

(9)(a) The provisions of the Income Tax Acts relating to the assessments, appeals and collection of and interest on income tax apply to DIRT.

(9)(b)&(c) With effect from 1 July 2009, interest is payable at a rate of 0.0274 per cent per day or part of a day on the late payment of DIRT (or of an amount on account of such tax) which is payable under subsection (3) or (4) without the making of an assessment.

For any day or part of a day before 1 July 2009 during which the DIRT remains unpaid, interest is payable at the rate of 0.0322 per cent per day or part of a day on the late payment of DIRT.

Assessed DIRT is subject to the normal interest provisions applying to assessed taxes except as is provided below.

The payment and procedural provisions of section 1080 which apply to interest on assessed taxes are applied to interest payable under this subsection on DIRT (or the amount on account of such tax) which is payable without the making of an assessment. Subsection (4) of section 1080 provides for certification of an interest debt in legal proceedings.

(9)(d) Where an assessment to DIRT is made so that the normal interest charge would arise under section 1080 that section is to apply with the omission of subsection (2)(b) which deals with the date as from which interest is payable in a case where there is an appeal against an income tax assessment. This provision is not required in the case of an assessment to DIRT because the due date for payment of interest in such a case is set out in subsection (8) which applies whether or not there is an appeal against such assessments.

(9A) A relevant deposit taker aggrieved by an assessment made on that person under this section may appeal the assessment by notice in writing to the Appeal Commissioners. An appeal must be made within 30 days after the date of the notice of assessment. The Appeal Commissioners will hear and determine an appeal in the manner provided for in Part 40A of the Act.

A relevant deposit taker may not appeal if they have not filed a self assessed return and paid the amount of appropriate tax due in accordance with their own self assessment (where the person is required to file a return).

Prescribed form for returns

(10) The return required under this section is to be made on the prescribed form and is to include a declaration that it is correct and complete.

Relevant Date: Finance Act 2021