Revenue has clarified that the Finance Act 2005 definition of “chargeable person” which will bring more PAYE taxpayers into the self-assessment net will not apply for the current 31 October filing date.

Readers will know that TCA97 s. 950 broadly defines “chargeable persons” having obligations under self assessment as taxpayers whose income is not taxed under PAYE. However, if the tax on a PAYE taxpayer's non-PAYE income is higher than the tax credits and adjustments to which they are entitled, they become a “chargeable person” and are obliged to submit a return. Even where the tax on the non-PAYE income may be accounted for through the PAYE system, changes made to the definition by FA05 permit Revenue to insist on a “chargeable person” treatment.

Practitioners have asked Revenue through the TALC process to clarify the circumstances in which they will seek to treat such taxpayers as chargeable persons. We are given to understand that an instruction will be published shortly to describe the circumstances, and that these will be based on a level of gross income without regard to the assessable amount.

The key point for immediate purposes is that the new rule will not be applied in respect of returns currently due, and that Revenue will seek to operate the new approach for the 31 October 2006 filing date in respect of returns for the 2005 tax year.