The Revenue issued an eBrief on 20 November 2006 clarifying that the approach set out in Tax Briefing 48 is not relevant for accounting periods ending on or after 1 January 2006.

ICAI flagged this issue as an area of concern in eNews of 3 November and also 17 November. The issue was also highlighted in tax.point and Practice Matters. Those publications advised that a change was unlikely.

In those publications it was noted that ICAI had corresponded with Revenue. This correspondence opened in October 2006 under the auspices of TALC. In the correspondence:

• ICAI accepted that, within the terms of Tax Briefing Issue 48, it appeared that the extra statutory concession had expired
• ICAI considered that, because the extra statutory concession had expired, the current position was incongruous with the intent of the concession in the first place, and asked if it could be extended
• ICAI advised Revenue that many taxpayers might not advert to the fact that the concession had expired, and that companies should not be penalised as a result
• ICAI were of the view that there was a deficiency in the legislation that needed to be addressed, and could not be addressed by invoking the Interpretation Act
• ICAI asked for a discussion with Revenue on the matter

Revenue eBrief No. 43/2006 which was issued on 20 November, and can be found at Section 2.02, outlined the Revenue's position that a strict application of the Tax Briefing Issue 48 policy will apply and is not applicable where only one instalment of Preliminary Tax is to be made. However, the eBrief went on to state that

“If any company has not paid preliminary tax for an accounting period ending on or after 1/1/06 in the mistaken belief that the practice set out in the Tax Briefing article remained possible, it should arrange to pay the tax concerned without further delay. Companies who dealt with their preliminary tax obligations on the basis mentioned and who wish to request consideration of their position, in the context of an otherwise compliant tax payment record, are advised to write to Technical Services, Office of the Collector-General, Sarsfield House, Francis Street, Limerick, identifying the late payment concerned and briefly explaining how the delay arose by reference to the misunderstanding of the continued application of the practice concerned.”

It can be inferred from this that Revenue will not seek to penalise start-up companies which acted in good faith in making a NIL payment of preliminary CT. It is also significant that Revenue did not specify particular accounting periods or payment dates when making this offer. On that basis, ICAI has acknowledged this aspect of the Revenue eBrief.

Preliminary CT is a problematic issue. As far back as January 2006, ICAI asked Revenue to review its operation and presented a detailed position paper on the matter. It has featured in CCAB-I pre-Budget submission, and also in ICAI submissions to the Small Business Forum which was established, and reported back, to the Minister for Enterprise, Trade and Employment this year. ICAI have consistently asked that ALL companies, regardless of size, be permitted to estimate preliminary tax based on previous results, as happens for individual income tax payers. If, for Exchequer reasons, that is not possible, the existing threshold of €50,000 needs to be raised significantly.

The most appropriate forum for all such changes is Oireachtas Eireann, through the Budget and Finance Bill processes. We are delighted that our submissions received a very favourable hearing, with the Minister announcing during the Budget that start-up companies do not have to make preliminary tax payments and the €50,000 threshold has been increased to €150,000.