Revenue e-Brief No. 31/2004
Computation of Interest on Tax Overdue.
24th September 2004
The Irish Taxation Institute's publication Tax Fax has, in the context of issues arising in relation to qualifying disclosures of offshore-related tax defaults, reported doubts raised by practitioners about the correct basis for computing interest, following the amendment of the rate of interest by the Finance Act 2002. Revenue, having fully considered the relevant legislation and taken legal advice, confirms that interest applies in respect of tax overdue on the basis set out in Revenue's booklet "Making a Qualifying Disclosure of an Offshore Related Tax Default":
- a rate of 1.25% for each month or part of a month of delay up to, and including, March 1998 (while different rates apply for months before August 1978, income arising in pre-self assessment years is being treated as income of 1987/88 for the purposes of computing interest),
- a rate of 1% for each month or part of a month of delay between April 1998 and August 2002 inclusive, and
- a rate of 0.0322% for each day or part of a day of delay from 1 September 2002.
Pending this statement, which confirms the existing basis for computing interest, Revenue accepted that access to the benefits of a qualifying disclosure would not be denied to persons who had not met the requirement to make full payment by the payment deadline solely because of uncertainties in relation to the correct basis for computing interest. To obtain the benefits of a qualifying disclosure following this statement, all such persons, who failed to make full payment of interest in accordance with the basis set out in Revenue's booklet, should now do so by making the appropriate additional payment.
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