|
Tax on Time
A growing problem with many businesses has been a delay in paying PAYE/PRSI and VAT to Revenue on a timely basis. It may seem necessary on occasion where severe cashflow difficulties arise, to delay payment where, for example, a monthly payroll bill has to be met, but this ultimately may well be a decision that leads to tax arrears spiralling out of control.
As a business is merely collecting such taxes on behalf of Revenue they are likely to take a harsh view of default in settling liabilities on time. Remember, there are steps you can take to improve cashflow in this area including:
· Ensure wherever possible that you are on a cash receipts basis of accounting for VAT on receipts from debtors.
· Enter a direct debit arrangement with Revenue
· Claim bad debt relief where possible
· Look at the (admittedly few) remaining ways that you can remunerate your staff in a way that does not result in a tax liability - an example being a non-cash exchangeable voucher which is tax free up to €250 per annum.
· Dealing with the genuine cashflow difficulty with Revenue as soon as it arises is recommended.
· It is essential that the returns are filed on time and a plan is prepared and discussed with Revenue to show how the outstanding taxes will be repaid over time
· Revenue will not act as a banker of last resort but in genuine cases will be reasonably accommodating
· Set up a separate business bank account, and transfer in a calculated amount each month to cover expected tax liabilities. This keeps these amounts separate from the main account, allowing for less chance of it being spent on other items.
|
