Full Self-Assessment Explained

The Finance Act 2012 introduced full self-assessment for chargeable persons requiring the taxpayer to self-assess when making a tax return. This new regime applies to Income Tax and CGT filings for the 2013 tax year and Corporation Tax returns for accounting periods commencing on or after 1 January 2013.

What this means is tax payers must calculate the tax due, including any late filing surcharge that arises.  If this is not done a fixed penalty of €250 will apply.  A new “self-assessment panel” has also been added to the Revenue Online Service (‘ROS’) and paper returns.

►  Online filers using ROS will be provided with a calculation of the tax liability due.

►  Taxpayers who are not required to file on ROS have to complete the self-assessment panel on the paper Form 11, unless they filed their return early i.e. by 31 August.

Making a Self-Assessment

If filing online via ROS the tax return (Form 11, Form 1, and CT1) will compute the Income Tax/Corporation Tax liability as before and provide an indicative calculation of the tax liability, as it always did.  You can choose to accept or reject this indicative calculation as the self-assessed liability due.  If you disagree with the ROS calculation you can enter your own figures in the self-assessment panel, together with an explanation as to why your figures differ.  When the return and self-assessment is submitted, Revenue will not issue a notice of assessment.  Instead, a notification acknowledging the self-assessment will issue. This acknowledgement will contain a copy of the self-assessment.

Failure to Self-Assess

Where no self-assessment is made when filing a return of income, a fixed penalty will apply.  However, where a paper return is filed on or before the 31 August in the year following the year of assessment, no penalty will be incurred.

Where a chargeable person does not self-assess, Revenue will issue a self-assessment on the customer’s behalf and a notice of assessment will issue.

In general, Revenue will not raise assessments, but there is provision to do so:

  • Where the customer fails to make a return.
  • Where the customer makes a return, but fails to self-assess; Revenue can issue a self-assessment on the customer’s behalf however a penalty may be incurred for failing to self-assess.
  • Where Revenue is not satisfied with the adequacy of a return.

Notices of Assessments are often requested by various government bodies e.g. as proof of income when a taxpayer is applying for a third level grant, a medical card etc. Revenue confirmed that they have discussed the new format with various government bodies so they are aware of the new notices and the information they contain.

Appeals

One of the key changes to note is that there is no appeal against a self-assessment or an amended self-assessment made by the taxpayer.

It is not possible to accept the ROS calculation of the liability and subsequently appeal this liability. Therefore, if you do not agree with the ROS calculation of the tax liability it is important that you enter your own figures in the panel when completing the return.

If you accept the ROS calculation as the self-assessed liability due and pay this amount, you should keep a copy of this calculation on file. This can protect you from interest and penalties if it later transpires that ROS was incorrect. Where it transpires that ROS is wrong and tax has been underpaid as a result, you will be notified and any outstanding tax must then be paid within a month.

As it is not possible to appeal a self-assessment declaration, caution should be exercised when completing the return. Professional advice should be sought in any cases of doubt about the tax treatment of any items included in a self-assessed tax return.