Reasons to File your Tax Return early

So that time of year is fast approaching again!

The income tax deadline in respect of the 2015 tax year is 31 October 2016 or 10 November 2016 if paying and filing your return using the ROS online services. Each year a number of our clients leave it until the very last minute to get their tax return prepared and filed which can result in a lot of stress and anxiety for the clients as they scramble to ensure that everything gets filed on time.

There are many reasons to ensure that your tax return is filed early with the below just being a flavour of why you should aim to be an early bird:

You don’t need to pay the tax owed until the tax deadline

A common myth is that once your tax return is filed that you also have to pay any tax owed. 
The truth is, even if you file your tax return early with the Revenue Commissioners, you are only obliged to pay any tax liability by the normal due date of 31 October 2016 (10 November if paying and filing online as outlined above).

Tax refunds are accelerated

Why wait to receive your tax refund?  Once you file your tax return, your refund should be processed soon after. That means the money could be sat in your bank account earning interest sooner.  If you wait until October, refunds usually take longer to be issued as Revenue staff and systems can be overwhelmed at this time.

Under or over payments of tax can often arise on employees or directors, where Revenue has made errors with their tax credits. Building subcontractors operating which have had tax deducted at source through Relevant Contracts Tax are often in a tax refund position.

You have time to plan for any tax owed

Filing your tax return and calculating any tax liability arising, allows you the time to start budgeting and managing you cashflow.

If you pay your tax bill late, Revenue will charge you interest. Late payment and filing of tax returns can also increase your risk of being selected for a Revenue Audit.

Allow time for Tax Planning

Preparing your tax return in good time ensures you, in consultation with your accountant, have the space to think about any tax planning opportunities available to you.

Not rushing to complete your tax return should also reduce the risk of any information relevant to the tax return being missed.  It also allows time for bank statements and any other financial documents you may need to prepare the return to be examined thoroughly for any additional tax deductible expenses which can reduce your tax bill.

Not missing the tax return deadline

If you file your tax return late, you will automatically be handed a late filing surcharge which is based on the final tax liability for the year in question.

The surcharge is calculated as follows: 

5% of the tax liability for the 2015 tax year, subject to a maximum of €12,695, where the 2015 tax return is filed after 31 October 2016 but before 31 December 2016

10% of the tax liability for the 2015 tax year, subject to a maximum of €63,485, where the 2015 tax return is filed after 31 December 2016.

How TaxAssist Accountants can help

We are available right now to help you complete your tax return early so you know how much tax you need to pay and by when.  If you are due a refund then it makes perfect sense to receive this as soon as possible.  We're working with many self employed individuals and business owners who have already filed theirs and we are ready to help you too.

Date published 18 Aug 2016

This article is intended to inform rather than advise and is based on legislation and practice at the time. Taxpayer’s circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this article, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.