SELF-EMPLOYED CONSTRUCTION workers and tradespeople have been urged not to “by-pass” the tax system in favour of black economy activity.
As self employed workers prepare for the October 31 tax deadline, tax return service specialist taxback.com has warned that those who do not comply with Revenue obligations could end up with significantly higher tax bills than they would have incurred if they had been compliant from the start.
Taxback.com said Ireland’s black economy is growing and more people in “certain occupations” are by-passing the tax system in favour of carrying out work and endeavouring to hide income from the taxman.
The company said that those who previously worked in the construction industry remain the largest group on the live register and are the group most likely to have become self-employed as a result of the recession but are also unlikely to have ever had to file a tax return.
Christine Keily of Taxback.com said many people who previously worked in construction, trades and manufacturing and are now self employed are now under pressure to file their own tax return for the first time. She said:
Although it may be tempting to some to try to ignore their tax filing obligations, particularly those who feel they haven’t clocked up enough hours this year to owe the taxman money, we would advise them that the Revenue are clamping down on those who try to hide earnings and more often than not if the tax return is filed accurately there may only be a relatively small tax bill to be paid – a lot smaller than that which would arise if Revenue applied penalties for non-compliance.
Keily said Revenue has the power to impose a broad range of penalties from a surcharge for late submission of a tax return which may be 5 per cent or 10 per cent of an individual’s tax liability depending on how late the return is, to specific penalties for failure to file a return or provide information on request.
“Penalties for filing a return negligently or fraudulently can be severe as they are based upon the actual tax liability,” she said. “Furthermore, interest on late payments of tax accrues on a daily basis and can result in significant tax bills.”
Taxback.com said there is no limit set in respect of the allowable deduction i.e. if a self-employed construction worker incurs expenses in relation to business related mileage etc. these items may be deducted in full from the receipts in order to determine the taxable amount of income.