Call for tax blunders to be revealed to assist taxpayers

THE REVENUE Commissioners should reveal the most common blunders made by taxpayers in order to help others avoid costly mistakes, the Irish Taxation Institute has suggested.

The institute also called for the simplification of the tax regime facing small businesses, during an address to the Oireachtas Committee for Economic Regulatory Affairs yesterday.

Institute director of technical services Cora O’Brien called for the “cost of getting it wrong” to be addressed. Interest rates of 8 to 10 per cent apply on underpaid tax, as well as penalties, which is a heavy burden for businesses to bear for inadvertent mistakes. These interest rates should be aligned with market rates, the institute suggested.

Some 80 per cent of about 500 new businesses, which responded to a recent survey, believed they were likely to make a mistake in their tax returns during their first few years in operation.

Almost all the respondents felt it would be beneficial if the Revenue provided advance guidance about the most common errors made by start-ups when filing returns.

The institute recommended that the current 22-page income tax return form be compressed to a four-page basic return, similar to that introduced in the UK, for self-employed individuals below a certain income level.

Furthermore, micro-businesses should be allowed to submit one tax return to cover all business taxes, while VAT and PAYE arrangements for SMEs should be simplified and synchronised.

The survey found that the VAT regime is the most onerous tax obligation facing businesses, with 72 per cent of respondents indicating that this tax head placed an unnecessarily high administrative burden on their business.

The institute suggested that the VAT registration thresholds for services and goods be aligned and increased, while the VAT cash receipts basis of accounting should be extended to businesses with a turnover of less than €2 million.

The taxation institute would also like to see a co-ordinated approach by State bodies to “reach out” to small businesses and help them deal with their tax obligations.