SELF ASSESSMENT SYSTEM FOR INDIVIDUALS A self assessment is a calculation of the amount of taxable income an !ains afte" e uctin!

"eliefs an allo#ances$ an a calculation of the income tax an %&T 'a(able afte" ta)in! into account tax e ucte at sou"ce an tax c"e its*

Notification of liabilit( to income tax tax an ca'ital !ains tax In i+i uals must notif( ,MR% of thei" cha"!eabilit( to income tax an %&T #ithin - months f"om the en of the (ea" i*e* b( .th Octobe" /01/ fo" /01121/* The maximum 'enalt( #he"e notice of cha"!eabilit( is not !i+en is 1003 of the un'ai tax*

Tax "etu"ns an )ee'in! "eco" s Tax "etu"ns must be file b( i* ii* 41 5anua"( follo#in! the en of the tax (ea" 6fo" elect"onic "etu"ns7* 8( 41 Octobe" afte" the en of the tax (ea" 6fo" 'a'e" "etu"ns7*

The maximum 'enalt( fo" eli+e"in! a tax "etu"n late is9 17 Initial 'enalt( 100 /7 An a itional 10 fo" e+e"( a( u'to a maximum of :0 a(s itional 'enalt( e;ual to

47 If mo"e than 4months but u'to - months late$ a the !"eate" of9 a* .3 of actual liabilit( ue b* 400

<7 Mo"e than 1/ months 6 e'en in! on tax 'a(e"s con uct
%on uct Delibe"ate an conceale =enalt( &"eate" of 9 >1003 of tax ue > 400 Delibe"ate not conceale &"eate" of

>?03 of tax ue > 400 An( An( othe" &"eate" of 9 >.3 of tax ue > 400

@ee'in! of "eco" s All tax 'a(e"s must )ee' an "etain all "eco" s "e;ui"e to enable them to ma)e an eli+e" a co""ect tax "etu"n until . (ea"s afte" 41 5anua"( follo#in!

the "ele+ant tax (ea"* The 'enalt( fo" failu"e to )ee' an "etain "eco" s is 4$000 'e" tax (ea"*

A/ 5UNE /00- 6c7

=a(ment of income tax an ca'ital !ains tax The self assessment s(stem ma( "esult in the tax 'a(e" ma)in! 4 'a(ments of income tax an %lass < NI% as follo#s9

Date 41 5anua"( in the tax (ea"

=a(ment 1st 'a(ment on account B .03 of '"e+ious (ea"s income tax liabilit( an %lass < NI%*

41 5ul( afte" the tax (ea"

/n

'a(ment on account B .03 of

'"e+ious (ea"s income tax liabilit( an %lass < NI%* 41 5anua"( afte" the tax (ea" Final 'a(ment to settle the

"emainin! tax liabilit( 6balancin! 'a(ment7

=a(ments on account a"e no"mall( fixe b( "efe"ence to the '"e+ious (ea"Cs tax liabilit( but if a tax 'a(e" ex'ects his tax liabilit( to be lo#e" than this he ma( claim to "e uce his 'a(ments on account to D 6a7 A state amount 6b7 Nil If the tax 'a(e"Cs e+entual liabilit( is hi!he" than the estimate he #ill ha+e "e uce the 'a(ments on account too fa"* Althou!h the 'a(ments on account #ill not be a Euste $ the tax 'a(e" #ill be cha"!e inte"est on the late

'a(ment of tax that #as ue ates fo" 'a(ments of account*

A/ 5UNE /00< A< 5UNE /00F

SUR%,AR&ES Su"cha"!es a"e no"mall( im'ose fo" an( tax 'ai late* It a''lies to

balancin! 'a(ments of income tax an %lass <NI% an an( %&T 'ai late* * It is not cha"!e on late 'a(ments on account* Su"cha"!es a"e cha"!e as follo#s9 Amount 'ai su"cha"!e

Githin 40 a(s of ue ate Mo"e than 40 a(s but not mo"e than months late Mo"e than . months late 8ut less than 1/ months late Mo"e than 1/ months late

Nil .3 of un'ai tax at .th month

.3 of un'ai tax at 1/th month H.3 abo+e .3 of un'ai tax at 1/th month Hthe t#o .3 abo+e

Inte"est Inte"est is cha"!eable on late 'a(ments of both 'a(ments on account an balancin! 'a(ments* In both cases inte"est "uns f"om the ue ate until the a( befo"e the actual ate of 'a(ment*

En;ui"ies into "etu"ns ,MR% ha+e to !i+e #"itten notice of intention to commence en;ui"ies into a self assessment tax "etu"n b( 1/ months afte" the ue filin! ate* ,MR% oes not ha+e to !i+e an( "eason fo" the en;ui"(*

%ommon =enalt( Re!ime I =enalties fo" inco""ect "etu"ns A sin!le ne# 'enalt( "e!ime has been int"o uce fo" inco""ect "etu"ns* The ne# 'enalt( "e!ime a''lies to inco""ect self>assessment tax "etu"ns$ self> assessment co"'o"ation tax "etu"ns$ an ma e on a VAT "etu"n* #he"e a mis> ecla"ation has been

The amount of 'enalt( is base on the amount of tax un e"state $ but the actual 'enalt( 'a(able is lin)e to the tax'a(e"Cs beha+io"$ as follo#s9

1* The"e #ill be no 'enalt( #he"e a tax'a(e" sim'l( ma)es a mista)e* /* The"e #ill be a mo e"ate 'enalt( 6u' to 403 of the un e"state tax7#he"e a tax'a(e" fails to ta)e "easonable ca"e 6is ca"eless7* 4* The"e #ill be a hi!he" 'enalt( 6u' to ?03 of the un e"state tax7 if the e""o" is elibe"ate* <* A hi!he" 'enalt( 6u' to 1003 of theun e"state tax7 if the e""o" is

elibe"ate an #he"e the"e is also concealment of the e""o"*

This is sho#n in the table belo#9

T('e of e""o" %a"eless Delibe"ate not conceale Delibe"ate an conceale

Maximum 'enalt( 'a(able 403 of =LR ?03 of =LR 1003 of =LR

,o#e+e"$ a 'enalt( #ill be substantiall( "e uce

#he"e a tax'a(e" ma)es

isclosu"e$ es'eciall( #hen this is un'"om'te b( ,MR%* Fo" exam'le$ if atax'a(e" ma)es an un'"om'te isclosu"e of an inco""ect be

"etu"n follo#in! a failu"e to ta)e "easonable ca"e$ the 'enalt( coul "e uce to nil 6See the table belo#7*

Notification of cha"!eabilit( A com'an( comin! #ithin the sco'e of co"'o"ation tax fo" the fi"st time must notif( the ,MR% #hen its fi"st accountin! 'e"io be!ins$ #ithin 4 months of the sta"t of its fi"st accountin! 'e"io *

The time limit fo" notif(in! the ,MR% of cha"!eabilit( is 1/ months f"om en of the accountin! 'e"io in #hich the liabilit( a"ises*

T('e of e""o" %a"eless Delibe"ate not conceale Delibe"ate an conceale

Un'"om'te 03 of =LR /03 of =LR 403 of =LR

="om'te 1.3 of =LR 4.3 of =LR .03 of =LR

Re'a(ments O+e" 'ai tax is "e'ai if its claime unless a !"eate" tax liabilit( a"ises

#ithin the next 40 a(s$ in #hich case$ it is off>set a!ainst such a liabilit(* Re'a(ments of tax a"e not taxable an ma( att"act inte"est*

%om'liance %hec)s An office" f"om the income tax office ma( con uct a com'liance chec) to a tax 'a(e"s business +ia ins'ection of his "eco" s "ele+ant fo" tax 'u"'oses* This ma( be one not late" than / (ea"s afte" the filin! ate of the "etu"n$ if the "etu"n #as ma e #ithin the o" ina"( time$ o" the fi"st ;ua"te" a( 641 5an$ 40 A'"il etc7 if othe"#ise* Dete"mination of assess assessments Ghe"e a notice to se"+ice a "etu"n has not been honou"e b( the tax 'a(e"$ the ,MR% ma( estimate the tax ue an eem that as the "etu"n cha"!eable*

This can onl( be one afte" < (ea"s follo#in! the en of that tax (ea"* Disco+e"( Assessments This ma( a"ise #he"e the tax 'a(e" has elibe"atel( o" othe"#ise ma e a "etu"n that lea s to a loss of "e+enue on the 'a"t of the ,MR%* An a itional

assessment fo" the lost "e+enue mi!ht be issue #ithin - (ea"s of the '"io" filin!$ if the filin! #as ue to ca"elessness o" u'to /0 (ea"s of the filin! if the '"io" filin! #as elibe"ate*

A''eals If a tax 'a(e" is not contente #ith the "etu"nsC t"eatment b( the ,MR%$ he ma( a''eal a!ainst such t"eatment #ithin 40 a(s* ="ima"il($ an #he"e i"ect taxes a"e in+ol+e $ he ma( a''eal to the ,MR% fo" an a''ointment of a Jcase#o")e"K #ho is an in e'en ent inte"nal "e+ie#e"* "e+ie#e"* Ghe"e in i"ect taxes a"e conce"ne $ he ma( a''eal to the Tax T"ibunal*