Regulations were published on Friday 29 August which oblige companies dealt with by Large Cases Division, and a number of State Agencies, to pay their taxes and file their returns through ROS from 1 January 2009.

S.I. No 341 of 2008 gives effect to TCA97 s917EA, which has been sitting on the statute books, uncommenced, for the last five years. A penalty of €1,520 will be applied to the companies and agencies concerned for failure to file and pay electronically. It's important to note this applies not just to mainstream Corporation Tax liabilities, but to all returns and taxes for which the ROS regime operates, including VAT and PAYE. Chartered Accountants both in business and in practice will need to take immediate action to ensure that business is geared up to pay and file through ROS for the first return affected – the December 2008 P30, which must be submitted by 14 January 2009.

Companies affected after 1 January 2010

1 January 2009 marks the commencement of mandatory eFiling for private sector companies handled through Large Cases Division. It seems that Revenue are to write to the companies affected, notifying them of the new requirement. The problems will really multiply however from 1 January 2010, at which time “a company which, at any time on or after 1 January 2010, is required under any provision of the Companies Acts to append audited accounts to its annual return”. This is a large constituency of companies, whose boundary needs careful consideration.

The Audit Exemption threshold (broadly turnover less than €7.3m and assets less than €3.65m) may have provided Revenue with a rule of thumb in establishing a cut-off point between sizeable business entities and other businesses – their original documentation had spoken of companies “not exempt from an audit requirement under Irish company law”. As the Regulations are phrased however, the subtleties in the Companies Acts concerning the application of the Audit Exemption could apply mandatory eFiling to smaller companies. The saver within the Regulations (Schedule 2 paragraph 2) may be the stipulation concerning appending audited accounts to the CRO Annual Return – small companies for the purposes of the Companies Acts for example can have different reporting requirements with the CRO.

Furthermore, a late return made to the Companies Registration Office disqualifies the company from claiming the audit exemption in respect of the accounts attached to the particular return as well as the following year's annual return, even if the company meets the other qualifying criteria for the audit exemption in respect of the financial years covered by the accounts attached to both returns. On the face of it, this latter requirement can impose a retrospective obligation to file electronically and the application of penalties to tax compliant companies.

The Regulations are quite clear on the premise that once a company is caught in the mandatory eFiling net, there they will remain, irrespective of increases perhaps in the audit exemption thresholds.

We strongly urge members to consult their ICAI resources on the Audit Exemption rules on Chariot at http://www.icai.ie/en/Members/Technical1/CHARIOT/ when deciding if these new Revenue regulations apply. The materials on the website of the Companies Registration Office are also helpful in this regard.

Signing of Order

The Minister for Finance had signed a Commencement Order which brought the provisions on mandatory e-filing and e-payment into operation with effect from 28 July 2008. Section 164 of Finance Act 2003 introduced a new Section 917EA on mandatory electronic filing and payment of tax.

There were two aspects to these provisions:

1. Commencement Order must be signed by the Minister for Finance;
2. Regulations must be made by the Revenue to oblige certain taxpayers to file electronically or pay electronically.

As mentioned above, Revenue have made regulations in order to oblige certain taxpayers to file their tax returns electronically/pay electronically.

ICAI Disappointment

In many ways, ROS was a project for which Revenue could be proud. It was developed by them through consultation, and with responsiveness to practical difficulties which arose. Over the past several years it was adopted, voluntarily, by accountants in practice and business alike, because it made commercial sense to do so. This resulted in a higher level of voluntary electronic tax compliance than in any comparable economy. Rather than Revenue continuing to develop the system and gaining greater market share through better meeting taxpayer's requirements, we are now being obliged to pay and file by electronic means. It is difficult to see how this measure will contribute to the ongoing development of the system and the provision of taxpayer service.

The regulations governing Mandatory Electronic filing are reproduced at Section 2.01 and S.I. 308 of 2008, the Commencement Order for FA03 s164, is reproduced at Section 2.02.