FINANCE
RECOGNISING THE SIGNS
The challenge in terms of timely compliance generally doesn’t come out of the blue. There are clear signals that should be known to management, says Harrahill. “The things to watch are revenues dropping,difficulties getting paid, an external shock such as a customer who owes your business money going out of business. It doesn’t just encompass extremes.The other reality is a squeeze in cash flow.There is lots of evidence of that, as some- times the speed with which credit facilities can be restricted doesn’t give a business a reasonable lead time to adjust.” In such cases Revenue encourages businesses to think about
a plan to improve their ability tomeet tax-payment obligations: find a solution within the business itself andmake contact with Revenue. “Before the problem starts to manifest itself show us where
you were chasing payments and so on. This demonstrates the bone fides of the business wanting to do it right. If Revenue has started on the path of enforcement and recovery this will restrict our ability to show reasonable flexibility and this is also going to cost the business money. Depending on what the problem is, this will determine the approach we’ll take,” explains Harrahill. “If there is a problem with VAT and payroll one month,we
will try to ring-fence that issue.A strong indicator of longer- term viability is whether a business thinks it can pay the next month and the one after.We are interested in working with viable companies, but I am not happy for Revenue to become the bank of last resort. Addressing tax returns is not just important froma compliance point of view but can help to put businesses back on a solid foundation.” Harrahill is keen to point out that Revenue will not dictate
to someone how they should manage their business, but rather tries to take the approach of facilitating them when they show serious commitment and provide a plan of action. “The time- frame is crucial.We’re not interested in and won’t permit long, protracted discussions and negotiations.Fromthe first contact the business has to go away with an understanding of what the issue is and we expect them to come back with a plan of cam- paign agreed in a reasonably short space of time – this is not
months, and you may not even be talking about weeks. “Once the timeframe is agreed, except in exceptional cir- cumstances, we expect businesses to deliver what they prom- ised. We need to be satisfied that the debt position is not getting worse. If there’s an instalment agreement in place, it’s very important to a business’s credibility that it sticks to this.” So what happens with companies that don’t alert Revenue to
problems? “If a business simply disengages and doesn’t, say,pay its PAYE and PRSI by 31 August at the latest for the month, on 1 September Revenue will start to look at this and send a notification of the amount we believe is due. By mid- to end- September if there has still been no explanation or return we will be close to the enforcement process kicking in. “Lack of engagement will lead to enforcement of some type
– perhaps court proceedings, a sheriff ’s visit or an attachment order [this is where Revenue sends an order to people who owe you money].This is not territory you want to be in as it carries reputational risk,” Harrahill warns. “Paying late is subject to interest; however, if a business is
generally compliant and makes a late payment, we will send a warning first noting that they will be subject to interest after that if they’re late.” The 31 October deadline for income tax for this year and
any balance due for last year is fast approaching and Harrahill encourages businesses to prepare their Form 11 now. There is an extended filing date of 16 November if you file it online. Late filing is subject to a surcharge.“If somebody finds them-
selves in a situation where making the balancing payment for last year is difficult, talk to us at an early stage and we may be able to come to an arrangement. In appropriate circumstances we can implement a phased payment arrangement,but interest will be charged. “The feedback we’ve got from business bodies is that the
approaches taken by Revenue in the past 18–24 months have been positive.Not every business is happy with the engagement but the people who are seriously trying to tackle problems have had a positive experience.My objective is to collect money and facilitate businesses to continue to provide employment. I don’t take a decision on enforcement lightly.”
‘WEARETRYINGTO ENSUREALEVEL
PLAYINGPITCHSOAS NOT TOFACILITATE
BUSINESSES THATARE
UNDERCUTTINGOTHERS BYBEINGTARDY’
VOL 3 ISSUE 4 2010 OWNER MANAGER 27
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