I work on a freelance basis and set up a limited company in 2007. I did this in order to limit any liability that might arise in respect of work I did for other companies.
My wife and I are directors, each with a 50% stakeholding.
I have operated my accounts as follows.
I charged for my services by issuing an invoice from the company, which would be paid into my company account. Any costs I incurred were paid from my company account.
At the end of the year, I would calculate the company gross profit and pay myself an equivalent amount as a fee, leaving the company with a net profit of 0.
I would then prepare a Form 11 self assessment and pay my tax and PRSI based on the fee as my income. The amounts involved here are small. Less than €20k.
I understand now that I shouldn't have been doing this.
I should have been paying myself under the PAYE system.
I haven't underpaid any tax. My tax liability would have been the same regardless (in fact, I may even be due a PRSI refund), both for myself and my company.
What will the Revenue's attitude be if I go back and tell this them this now? I have always submitted a letter with my Form 11 explaining how I operate my accounts, and no one from the Revenue has even queried it.
Should I just start doing the right thing in 2011 and leave it at that?
My wife and I are directors, each with a 50% stakeholding.
I have operated my accounts as follows.
I charged for my services by issuing an invoice from the company, which would be paid into my company account. Any costs I incurred were paid from my company account.
At the end of the year, I would calculate the company gross profit and pay myself an equivalent amount as a fee, leaving the company with a net profit of 0.
I would then prepare a Form 11 self assessment and pay my tax and PRSI based on the fee as my income. The amounts involved here are small. Less than €20k.
I understand now that I shouldn't have been doing this.
I should have been paying myself under the PAYE system.
I haven't underpaid any tax. My tax liability would have been the same regardless (in fact, I may even be due a PRSI refund), both for myself and my company.
What will the Revenue's attitude be if I go back and tell this them this now? I have always submitted a letter with my Form 11 explaining how I operate my accounts, and no one from the Revenue has even queried it.
Should I just start doing the right thing in 2011 and leave it at that?