Revenue Note for Guidance

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Revenue Note for Guidance

1080C Interest charge on relevant person under section 1080B

Summary

This new section removes the interest charge under section 1080B(11) TCA on a person who has a material interest in their employer company (as provided for in section 997A TCA) where both the person and their employer company are availing of debt warehousing, and both are liable for the tax due on the person’s salary. In these circumstances interest on the tax due on the person’s salary will be collected from the employer only. However, if an employer fails to pay the liabilities and interest on those liabilities, the employee will be liable for the interest on any amount of Schedule E liabilities remaining unpaid.

Details

(1) Subsection (1) defines various terms used in the section

“Covid-19 income tax” has the same meaning as it has in section 1080B;

“Covid-19 liabilities” has the same meaning as it has in section 991B;

“material interest” shall be construed in accordance with section 997A(1)(b);

“relevant emoluments” means emoluments paid by a relevant employer to a relevant person;

“relevant employer” means a company—

  1. in which a relevant person has a material interest, and
  2. of which the relevant person is an employee;

“relevant person” has the same meaning as it has in section 1080B.

(2) The section applies where a relevant person with a material interest in her/his employer company (as provided for in section 997A TCA) has warehoused income tax liabilities under section 1080B TCA including Schedule E liabilities from a relevant employer and the relevant employer has also warehoused PAYE (Employer) liabilities including tax deducted from emoluments paid to the aforementioned relevant person.

(3) Where this section applies, no interest will be payable by the relevant person on that part of the relevant person’s income tax liabilities relating to her/his schedule E income from a relevant employer who has also warehoused liabilities under section 991B TCA.

(4) Where an employer fails to pay Covid-19 liabilities, i.e. liabilities warehoused under section 991B TCA, and interest on those liabilities, then notwithstanding subsection (3), interest will be payable by the relevant person on the amount of warehoused liabilities relating to his/her schedule E income remaining unpaid.

Relevant Date: Finance Act 2021