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Penalties

Income Penalties

A person who fails to file a return or provide information on request, is liable to a penalty of €950 (s 1052). Where a return is filed negligently, the penalty is €125 plus the difference between the correct liability and the tax paid (s 1053). Where a return is filed fraudulently, the penalty is €125 plus twice the difference between the correct liability and the tax paid (s 1054).

Revenue may not seek a civil penalty wishes unless a court has determined that the penalty is due. Revenue may enforce collection of a penalty confirmed by a court, as if it were tax. Revenue may not recover penalties from the estate of a deceased person unless that person agreed, or a court confirms that the penalties are due. Revenue practice in relation to tax-geared penalties is given effect in the legislation.

VAT Penalties

A person who fails to comply with VAT obligations is liable to a penalty of €5,000 (s 115). If the failure is negligent, the penalty is €125 plus the difference between the correct liability and the tax paid. If the failure is fraudulent, the penalty is €125 plus twice the difference between the correct liability and the tax paid (s 116).

Revenue may not seek a civil penalty wishes unless a court has determined that the penalty is due. Revenue may enforce collection of a penalty confirmed by a court, as if it were tax. Revenue may not recover penalties from the estate of a deceased person unless that person agreed, or a court confirms that the penalties are due. Revenue practice in relation to tax-geared penalties is given effect in the legislation.

Stamp Duty Penalties

Failure to pay stamp duty on time gives rise to a penalty (s 14) of €30 plus:

(a) 10% of unpaid duty if less than six months late,

(b) 20% of unpaid duty if over six months but less than 12 months late,

(c) 30% of unpaid duty if over 12 months late.

Tax Geared Penalties

Penalty Table Category of Default  Qualifying Disclosure Finance (No.2) Act 2008

All defaults where there is a qualifying disclosure

 Penalty table for defaults that occurred on or after 24/12/2008 Prompted qualifying disclosure and co-operation

Unprompted qualifying disclosure and co-operation

All qualifying disclosures

in this category

Careless behaviour without

significant consequences 

  10%  3%
 First qualifying disclosure in these  categories  Careless behaviour with significant consequences  20%  5%
 Deliberate behaviour   50%  10%
 Second qualifying disclosure in these categories  Careless behaviour with significant consequences  30% 20%
 Deliberate behaviour   75%  55%
 Third or subsequent qualifying disclosure in these categories   Careless behaviour with significant consequences  40%  40%
 Deliberate behaviour   100% 100%
No Qualifying Disclosure  Category of Default  No Co-operation  Co-operation only
 All defaults where there is no qualifying disclosure  Careless behaviour without significant consequences  20%  5%
  Careless behaviour with significant consequences  40%  20%
Deliberate behaviour  100%  75%

 Notes:

  1. “Significant consequences”  means that the difference between the tax or duty underpaid is greater than 15% of the correct tax or duty payable for the relevant period.
  2. Where a second qualifying disclosure is made within a 5-year period, and where the nature of the default is either the “deliberate behaviour” or “careless behaviour with significant consequences” category, the legislation will provide that the level of mitigation will be reduced as per the Code of Practice.
  3. Up to the passing of Finance Act 2015 the tax geared penalties were computed as a percentage of the tax which had been saved because of an incorrect return. Finance Act 2015 applied a similar computation where an excessive claim has been made by a taxpayer in an incorrect return. With effect from 21  December 2015 the amount to  which the tax geared penalty is applied is calculated as the difference between:-

(a) the amount if tax payable or that could have been claimed on the basis of the incorrect return, statement, declaration, claim or account;and

(b) the amount so payable or refundable if the submission had been correct.

Penalties for “No Loss of Revenue” Tax Default

No Loss of Revenue Tax Default Category of Default  No Loss of Revenue Qualifying Disclosure
All “careless behaviour” no loss of revenue tax defaults where there is a “qualifying disclosure”  Prompted qualifying disclosure and co-operation Unprompted qualifying disclosure and co-operation
First qualifying disclosure in this category  Careless behaviour  Lesser of 6% or €15,000  Lesser of 3% or €5,000
Second qualifying disclosure in this category  Careless behaviour  Lesser of 6% or €30,000  Lesser of 3% or €20,000
Third or subsequent qualifying disclosure in this category  Careless behaviour  Lesser of 6% or €60,000  Lesser of 3% or €40,000
 No Loss of Revenue Tax Default  Category of Default   C0-operation only
 All “careless behaviour” no loss of revenue tax defaults where there is a “qualifying disclosure”  Careless behaviour  Lesser of 9% or €100,000

Notes:

  1. Claims for “no loss of revenue” will not be considered where there is general failure to operate the tax system or where there is no co-operation by the taxpayer.
  2. The tax will not be collected where it is proven by the taxpayer, to the satisfaction of Revenue, that there is no loss of revenue to the Exchequer.
  3. Interest may be changed, but only for the period of any temporary loss of revenue.
  4. Liability to a penalty arises in all cases except where the “innocent errorO or “technical adjustment” criteria are met. The maximum penalty is €100,000.
  5. All “no loss of revenue” claims should be submitted to Revenue in writing and include (in one submission) all supporting documentation to validate the “no loss of revenue” claim.

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