# A Cautionary Tale: Advice on outstanding income tax returns: Just do them!



## winniemcl (23 Aug 2010)

I recently filed income tax returns which were outstanding since 2005, and what a relief. I thought I was alone, but recently came across 2 other people in a similar boat. 

The story begins here.....
I was advised by an employer, with whom I was freelancing as a journalist in 2005 while on summer holidays from college, to register as self employed. I only worked in the job for 3 months, earning around €7,000, before returning to college. I rang revenue at the start of the summer and registered as self employed. I was under the misguided assumption that if I didn't earn very much money that I wouldn't be required to pay any tax. I pocketed my tax-free earnings, and went back to college, thinking no more of it. 

Around the same time, I began a regular freelancing gig with a local paper, earning between €100 and €200 a month, which continued when I went back to college. 

It was when I received my first notice to file an Income Tax Return, probably in 2006, that alarm bells began to ring. I rang the all knowing 'tax office' to inform them that I was no longer self employed (for some reason I didn't think the freelance work counted) and I was told that they would make note of that, but I would still have to fill out the tax return anyway. Ignorant and fond of procrastination as I was, I put it to the back of my mind and in late 2006, after finishing college, secured a full time job, earning around €28,000. Unbeknownst to me, I was still registered as self employed, despite earning a regular wage and paying (large chunks of) PRSI and PAYE every month. I was however, still freelancing on the local paper, bringing in an extra €2,000 a year. 

I received an income tax return reminder every year, but just ignored them, thinking they would go away, and believing that because my freelance work didn't bring me into the next tax bracket that I wouldn't owe 'them' any more money. What a fool! 

It was only when I decided to apply for rent relief in 2009 that I realised I really had to do something about it. My application was promptly sent back to me, with a note saying it couldn't be processed because I had outstanding tax returns. I was enraged! I had been paying taxes for three years, and rent for the same amount of time. SURELY _they_ owed _me_ me money. 

I finally decided it was time to bite the bullet and rang the tax office and finally found someone to listen to my story. I was told to file all of the missing tax returns, include ALL of my income (I'd already admitted on the phone to the freelance work...I was sure that somehow they'd find out anyway). And it was only when I sent an actual letter to Revenue that I was finally taken of the 'self-employed' list.

They sent out all the scary Form 11s and I, typically, put them in a drawer and forgot about them for another few months. It was only when I started getting very official looking reminders and warnings that I finally decided to take it seriously. I gathered any paperwork I had accrued over the years....P60s, pay slips, Tax Credit Certs...all of these things that had meant nothing to me in the past, and got to work filling out anything I could (which wasn't much). 

Five years of Income Tax Returns later, I wrote an honest cover letter, explaining that I hadn't been trying to get out of paying tax, I had just been plain ignorant. 

I've only just now started getting the bills. The first one came last week, for 2008, and it said I owed €557. I cried for half an hour, thinking that it would be the same for every year. But then another one came, saying that they owed ME money for 2006, bringing my bill down to €290. I've been watching the post every day, dreading what's going to come. I rang my local revenue office today to try to see if they could tell me where I stood. 

Thank god for the woman on the other end of the phone. She told me to fax her all of my rent relief and medical expenses forms for the past few years, and that she would calculate them, and take what I was owed off the €1,000+ I now owe in back taxes. I'm pretty hopeful, seeing as most people seem to get a few hundred euro a year back in rent relief.

Things are never as bad as they seem. Bite the bullet, and do it. I know I'm not alone in this situation. And I wish there had been someone to talk me through it.


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## Mrs Vimes (24 Aug 2010)

There are plenty of people to talk you through it, you'll find them in the phonebook under "accountants". I don't mean to sound condemnatory, but you didn't declare about 15,000 in income (7,000 + 2,000 x 4) and you were using all your tax credits on the day job. How did you think the 2,000 were going to be taxed?
I'm very happy to hear your med1 and rent1 refunds cover the tax owed though, you really sound like you were just naive rather than pulling a fast one.
Warning to anyone else in the same boat though - Revenue aren't always so nice.
Sybil


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## winniemcl (24 Aug 2010)

Oh I was totally naive and stupidly ignorant about the tax system. Never again.

I posted my ridiculous tale because I've since heard 2 stories very similar to mine, about people who are simply too afraid of massive penalties or not being able to sort it out; that they've let it go too far. To someone who understands the system is may seem easy, but to someone with very little knowledge it can seem an absolutely massive mountain to climb. 

I looked into getting an accountant to help me out and talk me through it, but can't afford afford it at the moment, and felt like if I was stupid enough to get myself into the situation, they I should get myself out of it. 

In saying that, I found the paperwork and the 'advice' given by revenue tends to assume that the person filling in the forms already knows a lot about the system and what certain things mean. They don't answer the questions that forums like this answer. And the list of contradictory things I was told during numerous calls to Revenue beggars belief. 

At least now I have educated myself somewhat. As I said, a cautionary tale.


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## T McGibney (24 Aug 2010)

winniemcl said:


> I looked into getting an accountant to help me out and talk me through it, but can't afford afford it at the moment, and felt like if I was stupid enough to get myself into the situation, they I should get myself out of it.



Apart altogether from avoiding needless worry and uncertainty, if you had engaged an accountant you probably would have found that their services would have cost you next to nothing, if you compare the cost of their fees against tax savings from claiming all your deductions/credits entitlements, and the tax deduction on their fees.


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## J.Ryan (24 Aug 2010)

Plus as you were self emplyed, those fee's could be considered allowable expenses, but it is very easy for people to panic and not to be able to see the wood for the trees.


The point of the OP remains true, bite the bullet and file any outstanding returns, its better in the long run.


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## winniemcl (24 Aug 2010)

T McGibney said:


> Apart altogether from avoiding needless worry and uncertainty, if you had engaged an accountant you probably would have found that their services would have cost you next to nothing, if you compare the cost of their fees against tax savings from claiming all your deductions/credits entitlements, and the tax deduction on their fees.



In hindsight I would certainly consider an accountant. I know for a fact I didn't fill out the forms as thoroughly as I could have, but just wanted to get it done. 

All forms have been faxed off now and hopefully I won't end up having to pay out too much. My ignorance hasn't gone unpenalised by the way. 10% of the underpaid tax for each year is added on because of the late filing of the returns. 

From now on I will be hanging on to EVERY receipt and bit of paper, and will have my eagle eye firmly on my tax affairs.


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## mmclo (24 Aug 2010)

Is it the case then that there were no penalties or interest in this situation?? Isn't non filing a criminal offence? I was charged for being a few days late one year. are the rules applied equally to everyone?


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## mmclo (24 Aug 2010)

mmclo said:


> Is it the case then that there were no penalties or interest in this situation?? Isn't non filing a criminal offence? I was charged for being a few days late one year. are the rules applied equally to everyone?



Apologies...posts crossed I think. In fairness there must be a penalty regardless of how naive somebody was


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## LS400 (24 Aug 2010)

Winniemcl, Fair play for your honesty in your post. Your right about the brown letter going to the bottom of the pile, although done with the intention of getting back to it at a later date. We are not always to quick off the mark to take control of a situation like you had. Just shows your human. Its a good warning and a good reminder of a post.
Cheer`s

Ls


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## elcato (25 Aug 2010)

> Five years of Income Tax Returns later, I wrote an honest cover letter,  explaining that I hadn't been trying to get out of paying tax, I had  just been plain ignorant.


I hate to speak Manglish but ignorance is no defense when it comes to revenue. On the plus side of not using an accountant, you are a bit more tax savvy now but I would also point out that the hours it took you for phone calls and file filling would add up to a lot more that the price of an accountant, not to mention the worry.


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