IT 61 A Revenue Guide to Professional Services Withholding Tax (PSWT) for Accountable Persons and Specified Persons

Transcription

1 IT 61 A Revenue Guide to Professional Services Withholding Tax (PSWT) for Accountable Persons and Specified Persons RPC005119_EN_WB_L_1

2 Summary of Guide 3 Part 1 - Outline of PSWT What is PSWT? Who must operate PSWT? Rate at which PSWT is deducted From which payments should PSWT be deducted? Excluded payments Amount from which PSWT is deducted Treatment of expenses Treatment of late payment interest Treatment of VAT, Stamp Duty and certain other fees 5 Part 2 - Accountable Persons Who is an Accountable Person? Registration of Accountable Persons Mandatory e-filing Obligation on accountable persons to deduct PSWT Obligation to remit PSWT to Revenue Payments by Accountable Persons to non-residents Payments made between Accountable Persons Payments by Accountable Persons to charities Payments made by a foreign-based branch or agency of an accountable person Inter group payments 8 Part 3 - Specified Persons Who is a Specified Person? How does a Specified Person get proof of PSWT deducted? Credit/refund of PSWT to Specified Person Preliminary Tax Interim Refunds What to do where form F45 is lost, destroyed or incorrect Where to claim credit/refund of PSWT 12 Part 4 - Professional Services Services covered by PSWT Services which are not regarded as professional services for the purposes of PSWT Services of employee 14 Part 5 - Administration of PSWT PSWT forms Form F45 15 (a) General 15 (b) Partnerships 15 (c) Security numbers 16 (d) Continuous/laser stationery forms F45 for completion using a computerised system 16 (e) Forms F45 for manual completion 17 (f) Completion of form F45 by Accountable Person Form F Form F30 (monthly return) Form F35 (annual return) 18 (a) General 18 (b) Details to be returned on form F35 18 (c) Schedule to accompany form F Requests for forms and security numbers Irish version of PSWT forms Rectifying errors 19 (a) PSWT deducted in error 19 (b) Excess PSWT deducted 20 (c) Insufficient PSWT deducted 20 (d) Payment made twice 20 (e) Payment made to the wrong person 20 (f) Error made in one tax year and rectified in a subsequent tax year 21 Appendix 1 - Revenue Opinions regarding Professional Services 22 2

3 Summary of Guide Part 1 Contains an outline of the PSWT scheme. It gives an overview of the circumstances in which PSWT applies, summarises how it operates and how credits and refunds can be claimed. Part 2 Contains information relevant to those who are required to deduct PSWT, known as accountable persons. It advises of the types of bodies that are accountable persons and how they should register with Revenue. It also outlines the obligation on accountable persons to deduct PSWT from payments for professional services and sets out limited circumstances in which that obligation does not apply. Part 3 Contains information that is relevant to persons from whom PSWT has been deducted, known as specified persons, including how they can get credit for, or refunds of, PSWT. Part 4 Provides information on the services to which PSWT applies. A summary of Revenue opinions relating to the applicability of PSWT to payments for various types of services is also included in Appendix 1. Part 5 Gives details of the administrative procedures in place for the PSWT scheme. It includes information on the use and completion of various PSWT forms by accountable persons. Contacting Revenue Contact details for all Revenue offices can be obtained using the Contact Locator on the Revenue website, Forms and leaflet service All forms and information leaflets referred to in this guide are available from the Revenue website, or from the Revenue Forms and Leaflets Service at LoCall (ROI only) or (from outside Ireland). 3

4 Part 1 - Outline of PSWT 1.1 What is PSWT? Chapter 1, Part 18 of the Taxes Consolidation Act 1997 provides for a withholding tax to be deducted from payments made by certain bodies in respect of professional services. The tax is known as Professional Services Withholding Tax (PSWT). Accountable Persons are required to deduct PSWT from Relevant Payments made by them to Specified Persons in respect of Professional Services and to remit the amounts deducted to Revenue. PSWT deducted is, in general, available for offset against the specified person s final income tax/ corporation tax liability for the period within which the relevant payment is charged to tax. Pending offset against a specified person s final tax liability, a claim for an interim refund of PSWT may, in certain circumstances, be made during the year in which it is deducted (see Part 3 for further details). 1.2 Who must operate PSWT? PSWT must be operated by each of the bodies listed as accountable persons in Schedule 13 to the Taxes Consolidation Act In general terms, these are State and Semi-State bodies (see Part 2 for further details). Authorised health insurers are accountable persons and payments made by them to registered medical or dental practitioners or their employers under contracts of insurance are relevant payments for PSWT purposes. 1.3 Rate at which PSWT is deducted The rate at which PSWT is deducted is the standard rate of income tax in force at the date on which the relevant payment is made. The standard rate of income tax is currently 20%. 1.4 From which payments should PSWT be deducted? Subject to certain exclusions (see section 1.5), PSWT should be deducted from all relevant payments. Relevant payments are payments made by accountable persons in respect of professional services. A relevant payment need not necessarily be in respect of services provided directly to the accountable person. PSWT applies where an accountable person makes a payment in respect of a professional service, whether it is provided to the accountable person or to another person. 4

5 1.5 Excluded payments There are certain payments from which PSWT should not be deducted. These include: payments which come within the scope of the PAYE system (generally a contract of service). Information on the difference between a contract of service and a contract for services is contained in the Code of Practice for Determining Employed or Self-Employed Status of Individuals, available on the Revenue website or from Revenue Forms and Leaflets Service. payments which come within the scope of the Relevant Contract Tax (RCT) scheme, certain payments between accountable persons (see section 2.7), payments by an accountable person to a charity that has been granted an exemption from income tax by the Revenue Commissioners (see section 2.8), where the payment is made by a foreign-based branch or agency of an accountable person (see section 2.9), certain inter group payments (see section 2.10). 1.6 Amount from which PSWT is deducted Where an accountable person makes a relevant payment to a specified person, the accountable person is obliged to deduct PSWT at the standard rate of income tax from the total amount of the payment being made, subject to the following Treatment of expenses Where PSWT applies to a relevant payment, it applies to the entire payment, including any element in respect of the reimbursement of expenses incurred by the specified person. This continues to be the position where expense items are isolated for separate payment or where the expenses are separately invoiced. Examples of expenses include costs incurred for travel, subsistence, postage, printing, stationery, secretarial services, advertising, and payments by the specified person to third parties engaged by the specified person in connection with the delivery of the service to the accountable person Treatment of late payment interest With effect from 7 August 2002, it is an implied term of every commercial contract that interest is payable if debts are not paid on time. Therefore, where interest is payable on a payment in respect of a professional service, PSWT should also be deducted from the interest. (See Tax Briefing, Issue 52 - May 2003, available on the Revenue website) Treatment of VAT, Stamp Duty and certain other fees VAT charged by the specified person should be excluded for the purposes of calculating the amount of PSWT that is to be deducted. In addition, the following fees paid by the specified person to the appropriate authorities should also be excluded where they are invoiced to the accountable person: Stamp Duties Land Registry fees Deed of Registration fees Company Office fees Court fees 5

6 Part 2 - Accountable Persons 2.1 Who is an Accountable Person? For the purposes of PSWT, accountable persons include the following: Government Departments and Offices Local authorities The Health Service Executive Authorised Health Insurers Commercial and non-commercial semi-state bodies and their subsidiaries. A list of accountable persons for PSWT purposes is set out in Schedule 13 to the Taxes Consolidation Act In addition to the bodies listed on Schedule 13, any subsidiary of a body listed on Schedule 13 and any body, while not owned 51% by one accountable person, which is under the control of more than one accountable person i.e. a joint venture is also an accountable person for the purposes of operating PSWT. 2.2 Registration of Accountable Persons Accountable persons must be registered with the Revenue Commissioners for the purposes of operating PSWT. Where a body/organisation is unsure whether or not it is an accountable person, it can obtain advice from the Revenue office dealing with its tax affairs. On registration for PSWT, arrangements are made to supply the accountable person with the forms required to operate the scheme. Information in relation to PSWT forms is set out in Part Mandatory e-filing With effect from the 1 January 2010, accountable persons are required to file all tax returns (including PSWT returns), and make payment to Revenue, by electronic means using the Revenue On-Line Service (ROS). The regulations giving effect to mandatory e-filing and information on how to register for ROS can be accessed on the Revenue website. 2.4 Obligation on accountable persons to deduct PSWT In general, accountable persons must deduct PSWT from all payments made in respect of professional services. However, there are certain exceptions to this rule and these are outlined in sections 2.7 to To avoid misunderstandings, accountable persons are advised to inform specified persons at contract stage that PSWT is deductible from relevant payments to be made under the contract involved. 2.5 Obligation to remit PSWT to Revenue Accountable persons are responsible for the deduction and remittance of PSWT to Revenue. If an accountable person refuses or neglects to remit PSWT, the Revenue Commissioners can raise assessments for the PSWT on that accountable person. The Revenue Commissioners also have the powers necessary to carry out on-site audits of accountable persons. 6

7 2.6 Payments by Accountable Persons to non-residents With the exception of specifically excluded payments, an accountable person must deduct PSWT from all relevant payments. This obligation remains where the specified person is non-resident even though they may be entitled to a refund of the PSWT deducted as they are not subject to Irish income or corporation tax on that income. For details on how non-residents can make a claim for a refund of PSWT deducted, please see Part Payments made between Accountable Persons Certain payments made by one accountable person to another are specifically excluded from the obligation to deduct PSWT, namely: payments made by one accountable person to another accountable person in re-imbursement of payment for professional services, and payments made by one accountable person to another accountable person where, under the Tax Acts, the income of the accountable person receiving the payment is exempt from income tax or corporation tax. Where payments between accountable persons fall within the second category above, the payer should obtain confirmation in writing from the payee that they are in fact covered by this exclusion. 2.8 Payments by Accountable Persons to charities PSWT does not apply to payments made by an accountable person for professional services provided by a charity that has been granted an exemption from tax by the Revenue Commissioners. Charities that have not been granted an exemption from tax by Revenue continue to be subject to PSWT on all relevant payments received from accountable persons. Again, where an accountable person is making a payment to a charity, the payer should obtain confirmation in writing from the payee that they are in fact covered by this exclusion. 2.9 Payments made by a foreign-based branch or agency of an accountable person PSWT need not be deducted from a payment made by a foreign-based branch or agency of an Irish resident company that is an accountable person where all of the following conditions apply: the payment is made abroad by the branch/agency, the payment is for professional services provided abroad to the branch/agency, and the person providing the professional service (the payee) is resident abroad. In all other circumstances, PSWT should be deducted by accountable persons from payments to non-residents. 7

8 2.10 Inter group payments The Revenue Commissioners accept that PSWT does not have to be deducted by a company that is an accountable person from a payment in respect of professional services where such payment is made: to a subsidiary of the company, by a subsidiary to its parent company, or by one subsidiary to another subsidiary of a common parent company. Subsidiary for these purposes means a 51% subsidiary. 8

9 Part 3 - Specified Persons 3.1 Who is a Specified Person? Specified persons can be individuals, companies or persons operating in partnership. Subject to the specific exclusions referred to in Part 2, an accountable person must deduct PSWT from relevant payments made to all specified persons, including specified persons who are non-resident. While specified persons providing services to government bodies may be required to produce a Tax Clearance Certificate this does not negate the obligation on the accountable person to deduct PSWT. Where a relevant payment is made to a partnership then each person who is a partner in the partnership is a specified person. For administrative purposes, the accountable person can make a relevant payment to a partnership. Where a relevant payment is made to a partnership the precedent partner in turn apportions both the payment and the PSWT deducted between the partners. 3.2 How does a specified person get proof of PSWT deducted? When making a relevant payment, the accountable person must give the specified person a form F45 confirming the amount of the payment made and the amount of PSWT deducted. However in order that the accountable person may issue form F45, the specified person must provide the accountable person with: in the case of an individual, his/her Personal Public Service Number (PPS No.), in the case of a company, its tax reference number and in the case of a partnership, the partnership s tax number. If VAT is included in a relevant payment, the VAT registration number must also be provided, if different from the PPS No. or tax reference number outlined above. Non-resident persons are required to state the tax reference that applies to them in their country of residence. Form F45 can not be issued in the absence of a tax reference number (see also 5.2). 3.3 Credit/refund of PSWT to Specified Persons Apart from a situation where an individual commences business, PSWT deducted by an accountable person from a relevant payment is available as a credit against the gross amount of income tax or corporation tax chargeable on the specified person s income for the period in which the relevant payment is charged to tax. Therefore, it will (together with any other credits to which the specified person is entitled) reduce the amount of tax payable by the specified person for the period. For individuals assessable to income tax, credit for PSWT deducted from a relevant payment is normally given against the amount of income tax chargeable for the tax year in which the relevant payment is chargeable to tax. For companies assessable to corporation tax, credit for PSWT deducted from a relevant payment is given against the amount of corporation tax chargeable for the accounting period in which the relevant payment is chargeable to tax. For an individual commencing business, credit for PSWT deducted in the first year of business will not normally be given until the second tax year. This arises because the profits shown in the first 12 months accounts may form the basis of a charge to income tax for the first two tax years. In such circumstances, the PSWT deducted is deemed to be deducted in the basis period for the second tax year. However, such an individual may qualify for an interim refund (see section 3.5). An accountable person, on making a payment from which PSWT is deducted, gives the specified 9

10 person a form F45. The information recorded on form F45 includes: the amount of the relevant payment, the amount of PSWT deducted, and the tax reference number of the specified person who provided the professional service. A form F45 is evidence that the specified person has had PSWT deducted from a relevant payment. Accordingly, it is a valuable document and should be retained carefully by the specified person, as it must be presented to Revenue in support of any claim for credit or refund, if requested. Specified persons can claim a credit of PSWT relating to a tax year/accounting period by completing the relevant section of their tax return for that year/period. Where such claims result in an overpayment of tax, the excess is, subject to any other outstanding tax liabilities of the specified person, available to be refunded by Revenue provided that the claim is made within relevant time limits. Where an accountable person makes a payment to a partnership they should issue the form F45 in the name of the partnership and must quote the tax number of the partnership (see section 5.2). The precedent partner must then apportion the payment and the associated PSWT between each of the partners and provide them with a copy of the form F45 and a statement showing their share of the payment/pswt. These documents are then used by the partners, as specified persons, to claim credit/refunds for PSWT suffered. 3.4 Preliminary Tax Under the Pay & File system, preliminary tax in respect of a tax year or accounting period is payable by a specified person directly to the Collector General by reference to the amount of tax payable (tax payable is the gross amount of tax due (i.e. amount chargeable) less any credits to which the person is entitled) by the specified person for that tax year or accounting period. However, in order to avoid interest charges, a certain minimum amount of preliminary tax must be paid for the tax year or accounting period involved. In the case of an individual liable to income tax, the amount of preliminary tax to be paid must be equal to or exceed the lower of: 90% of the amount of tax payable for the tax year, 100% of the amount of tax payable for the previous tax year, or 105% of the amount of tax payable for the pre-preceding tax year. (This final option is only available where preliminary tax is paid to the Collector General by direct debit and does not apply where the tax payable for the pre-preceding year was nil). As indicated earlier, PSWT can be taken into account as a credit against the amount of tax chargeable for a tax year or accounting period in computing the amount of tax payable for the year or period. Example An individual estimates that the amount of income tax chargeable for the tax year 2012 to be 40,000 and has PSWT of 10,000 available as a credit against the amount of income tax chargeable for that year. Therefore, the amount of income tax payable by the individual for the year 2012 is 30,000. For the tax year 2011, the income tax chargeable on the individual was 25,000 and PSWT of 15,000 was available as a credit against the amount of income tax chargeable for that year. Therefore, the amount of income tax payable for 2011 was 10,000. If the individual wishes to pay preliminary tax for 2012 by reference to the 90% rule, then the amount to be paid directly to the Collector General is 27,000 (i.e. 30,000 x 90%). If the individual wishes to pay preliminary tax for 2012 by reference to the 100% rule, then the amount to be paid directly to the Collector General is 10,000 (i.e. 10,000 x 100%). 10

11 Regardless of which option the individual takes, the PSWT of 10,000 that was deducted in 2012 may not be treated as a payment (or part payment) of the preliminary tax that is required to be paid directly to the Collector General. 3.5 Interim refunds Rather than waiting to have PSWT credited against the amount of income tax or corporation tax chargeable on a specified person s income for a tax year/accounting period, the specified person may make a claim during the year/period for an interim refund. Certain conditions must be satisfied before an interim refund claim is allowed. In general, the following three conditions must be met before an interim refund may be made: i. the profits for the period immediately preceding the period of claim have been finalised, ii. the tax payable for that preceding period has been paid in full, and iii. forms F45 for the PSWT in question are provided to the taxpayer s Revenue office. Example PSWT is deducted from a relevant payment made on 1 July Accounts of the specified person are made up to 30 September each year and the relevant payment will be taken into account in computing the profits for the year to 30 September In the case of an individual, in order to qualify for an interim refund, the profits of the basis period for the tax year 2011 (i.e. profits for the year ended 30 September 2011) must have been finalised and the tax payable for the tax year 2011 must have been paid. In the case of a company, in order to qualify for an interim refund, the profits of the accounting period ended 30 September 2011 must have been finalised and the tax payable for that period must have been paid. From the PSWT deducted, an amount equal to the tax liability at (ii) above is retained. In addition, an amount equivalent to any outstanding liability is retained. The balance of PSWT deducted, if any, is then available to be refunded to the specified person. In cases of particular hardship, some or all of the above conditions may be waived where amounts of PSWT withheld are substantially in excess of likely final tax liability and failure to meet the conditions would not permit an interim refund in certain circumstances, such as: a once-off or unusual receipt, a once-off or unusual reduction in income, or a demonstrable permanent reduction in income, or if, through no fault of the taxpayer, there is a delay in finalising liability to tax for a particular year due to illness or other exceptional circumstance, or if income tax liability (net of PSWT credited) paid in a period of claim together with PSWT deducted in that period exceeds an amount arrived at by multiplying the taxpayer s income for the period by the higher rate of tax which applies for that period. A person who has recently commenced business may wish to apply for an interim refund. Because such a person would be unlikely to satisfy the three conditions outlined above, Revenue applies special treatment whereby likely tax liability of the first tax year or accounting period is estimated in calculating whether an interim refund arises. All claims for interim refunds should be made to the specified person s Revenue office using form F50 and should be supported by relevant forms F45/F43. Further information on interim refunds is contained in Statement of Practice SP IT/3/90, available on the Revenue website and from Revenue Forms and Leaflets Service. 11

12 3.6 What to do where a form F45 is lost, destroyed or incorrect Form F45 lost/destroyed Specified persons should retain forms F45 carefully. Where, exceptionally, a form F45 is lost or destroyed, the specified person should inform the accountable person from whom they received the form F45 and request the accountable person to issue a form F43. Incorrect form F45 Where the information contained on form F45 is incorrect, the specified person should return the original form F45 to the accountable person and request that a form F43 be issued. The most common errors relate to: the amount of the relevant payment stated on the form F45, or the amount of PSWT stated on the form F45. Tax Briefing 28 (October 1997, pages 3-4), available on the Revenue website, clarifies the circumstances in which a form F43 can be sought from an accountable person. 3.7 Where to claim credit/refund of PSWT General Apart from charities and non-residents (which are dealt with below), claims for credit or interim refunds of PSWT are dealt with in the Revenue office dealing with the tax affairs of the specified person. Charities Claims for refund of PSWT by specified persons who are charities should be made to: Charities Section, Collector-General s Division, Government Offices, Nenagh, County Tipperary. Tel: (ROI only) or (from outside Ireland) charities@revenue.ie Non-residents Where a non-resident is not chargeable to tax in the State for the year/period in which PSWT is deducted, repayment of the PSWT should be claimed from: International Claims Section, Collector-General s Division, Government Offices, Nenagh, County Tipperary. Tel: or (from outside Ireland) intclaims@revenue.ie Non-residents claiming repayment of PSWT must complete claim form IC11 and separate questionnaire (available on the Revenue website) and send them together with relevant forms F45 to the above address. Where a non-resident is chargeable to tax in the State for the period in which the PSWT is deducted, claims for credit or for interim refund of PSWT should be made to the Revenue office that deals with the tax affairs of the non-resident. A non-resident is chargeable to tax in the State for the period in which the PSWT is deducted, if during that period the non-resident carries on business through a permanent establishment situated in the State. 12

13 Part 4 - Professional Services 4.1 Services covered by PSWT PSWT applies to payments made for the provision of professional services. Section 520 of the Taxes Consolidation Act 1997 lists certain services that come within the meaning of professional services. The term professional services includes: services of a medical, dental, pharmaceutical, optical, aural or veterinary nature, services of an architectural, engineering, quantity surveying or surveying nature, and related services, services of accountancy, auditing or finance and services of financial, economic, marketing, advertising or other consultancies, services of a solicitor or barrister and other legal services, geological services. The above is not an exhaustive list. A summary of the Revenue position in relation to the application of PSWT to various services is set out in Appendix 1. It should be noted that a service, which is not professional in nature, may be subject to PSWT where it forms part of a wider contract for professional services. In those circumstances, all payments under the contract come within the scope of PSWT. For example, a printing service on its own is not regarded as a professional service. However, where a printing service is provided as part of a wider design or consultancy service, payment for the entire service, including the printing element, comes within the scope of PSWT. This applies even when elements of the service are separately invoiced. 4.2 Services which are not regarded as professional services for the purposes of PSWT Revenue does not regard the following services as professional services for the purposes of PSWT: teaching, training or lecturing services, translation services including services of an interpreter, proof-reading services, services of stenographers, setting and assessing oral, aural or written examinations, contract cleaning services, maintenance and repair work. 13

14 4.3 Services of employee PSWT is deducted from self-employed persons who provide professional services. It does not apply to employees as payments to employees fall within the PAYE system. Employers must operate PAYE on payments to employees and office holders (e.g. board members) even if the duties performed are professional in nature. Employers may not deduct PSWT as an alternative. In this regard, the following are available on the Revenue website: Code of Practice for Determining Employed or Self-Employed Status of Individuals, and Article on the Taxation of Part-Time Lecturers/Teachers/Trainers in Tax Briefing 28 - October 1997 (pages 19/20). 14

15 Part 5 - Administration of PSWT 5.1 PSWT forms The forms used in the administration of PSWT are: Form F45 - issued by an accountable person on making a relevant payment to a specified person, Form F43 - issued by an accountable person to a specified person only where form F45 is (i) lost or destroyed or (ii) where the details on the form F45 are found to be incorrect, Form F30 - is the monthly return made to Revenue by an accountable person of the total amount of PSWT deducted from all relevant payments made by the accountable person in the preceding month, Form F35 - is the annual return, made by an accountable person declaring their PSWT liability for the tax year. It is accompanied by a schedule giving details of the total relevant payments made to, and the total PSWT deducted from, each specified person in the tax year. 5.2 Form F45 (a) General Forms F45 are available for completion either manually or by way of a computerised system. On registration for PSWT, accountable persons should indicate if they intend to use manual forms F45 or a stationery version of the form F45 for completion using a computerised system. Form F45 is a valuable document as it provides documentary evidence of the amount of PSWT deducted from a relevant payment as well as the amount of the payment and of VAT charged, if applicable. A form F45 must be issued by the accountable person in respect of each relevant payment made. An accountable person can only issue form F45 in circumstances where they have been provided with the specified person s tax reference number. In the case where an Irish tax number is provided, the accountable person can seek confirmation from the specified person s that the tax number provided by them is the correct tax number for the specified person s concerned. The accountable person can also seek confirmation regarding the validity of an Irish tax number directly from the Revenue Commissioners. A second form F45 should never issue in respect of a relevant payment. Therefore, where a form F45 issued to a specified person is lost or destroyed or where the details entered require amendment, a form F43 should be sought from the accountable person. Specified persons must retain forms F45 for inspection as they may be required by Revenue to support an application for credit of PSWT deducted. Claims for interim refunds must be supported by the relevant forms F45 at the time of the claim. (b) Partnerships In the case of payments made to a partnership, the accountable person may issue the form F45 to the partnership rather than to the individual partners. In these cases, the precedent partner is responsible for furnishing the accountable person with the partnership s tax number. As in the case of payments to individuals/companies, the accountable person can ask the precedent partner to provide evidence of this number or, in the case of an Irish partnership, they can ask Revenue to confirm that the tax number provided is related to that partnership. 15

16 (c) Security numbers Each form F45 issued by an accountable person must contain a security number. Security numbers comprise of six digits preceded by a separate dedicated alpha character. Manual forms F45 incorporate the security number. Where Revenue approval is given for the use of a stationery version of the form F45 for completion with a computerised system, a range of security numbers is supplied by Revenue for use with that stationery. A register is maintained by Revenue of the range of security numbers issued to each accountable person. Accountable persons are required to put measures in place to ensure that only security numbers from the range supplied to them by Revenue are used. The accountable person must ensure that a separate security number from this range appears on each form F45 issued via the computerised system. A security number can be used only once. (d) Continuous/laser stationery forms F45 for completion using a computerised system Revenue approval An accountable person wishing to use continuous/laser stationery for the completion of forms F45 must first get approval from their Revenue district. Where an accountable person seeks Revenue approval to use continuous/laser stationery for the completion of forms F45, the accountable person s computer system must be capable of: issuing a form F45 in respect of each relevant payment made, printing a security number, from the range of numbers supplied by Revenue, on each form F45 issued, flagging, that the range of security numbers assigned by Revenue are coming to an end, in order that a further range of security numbers may be requested from Revenue. (It is important not to exceed the range of security numbers assigned by Revenue as this can result in security numbers being duplicated), retaining a detailed record of each relevant payment made, including a record of the security number assigned to that payment. In addition, where the computer system also calculates: the monthly remittance/return of PSWT to Revenue, the system must be capable of altering the monthly remittance, to take account of any payment errors made and corrected in relation to previous months in the tax year, the annual PSWT liability of the accountable person, the system must be capable of producing an end of year schedule, which takes account of any payment errors made and corrected in the tax year. Continuous stationery forms F45 (supplied by Revenue) Where following Revenue approval (as referred to above), an accountable person opts to use the continuous stationery version of form F45 Revenue will supply the stationery to the accountable person. Laser stationery approved by Revenue Revenue has also approved a laser stationery version of form F45 for completion using a computerised system. It is sourced separately from Revenue, from an approved source. For information regarding laser stationery, accountable persons should contact their local Revenue office. 16

17 (e) Forms F45 for manual completion Manual forms F45 have a security number printed on each form. Revenue maintains a register of all manual form F45 s issued to each accountable person. These forms should be stored in a secure place by the accountable person to whom they are assigned, as, once received from Revenue, they become the responsibility of that accountable person. When a relevant payment is being made, part 1 of form F45 should be given to the specified person and part 2 retained by the accountable person as a record of: the relevant payment made and PSWT deducted, and the security number related to the form F45. (f) Completion of form F45 by Accountable Person All sections of form F45 should be completed in full. Particular points to note are: Specified Person Details Specified persons must supply their tax reference number to the accountable person. Failure to do so will mean that the accountable person is unable to issue the specified person with form F45. Without a form F45 the specified person cannot obtain any credit for, or refund of, PSWT. Specified persons who are not resident in the State and who do not have an Irish tax reference number must supply the accountable person with the reference number they use in their home country. Relevant Payment details At A1, insert the gross amount of the payment inclusive of the VAT attaching thereto. At A2, insert the amount of VAT. [VAT is excluded from the charge to PSWT]. At A3, insert the amount of PSWT deducted. This is calculated by excluding the VAT element from the gross payment and applying the standard rate of tax, as follows: (A1 - A2) x standard rate of tax Amounts shown on form F45 must be in Euro. Where a payment is made to a person resident outside the State, the equivalent foreign currency amounts may be shown in brackets beside the Euro amounts. As forms F45 are issued in respect of relevant payments made by an accountable person, there are no circumstances where a form F45 with nil payment can be issued. 5.3 Form F43 Form F43 is the only evidence that will be accepted by Revenue in the absence of form F45. Similar to forms F45, each form F43 has a pre-printed security number assigned to it and should be stored in a secure place as, once received from Revenue, these forms become the responsibility of the accountable person. A form F43 should be issued in exceptional circumstances only. Tax Briefing 28, available on the Revenue website, contains an article that clarifies the circumstances in which forms F43 should be issued by accountable persons. A form F43 should only be issued by an accountable person where the original form F45 which was issued: is lost or destroyed and a duplicate, or alternative evidence of payment and PSWT deduction, is requested by the specified person (in such circumstance, the accountable person should request written confirmation from the specified person that the form F45 is lost or destroyed), or 17

18 is incorrect (in such circumstance, the accountable person should ensure that the original form F45 is retrieved from the specified person before the Form F43 is issued). Where the form F45 is lost or destroyed, the accountable person must include the details from the original form F45 on the form F43 and tick the duplicate box on the form F43. Where the form F43 is issued as an amendment, i.e. the form F45 issued was incorrect, the accountable person must include the correct details on the form F43 and tick the amendment box on the form F43. The security number of the original form F45 must be stated on the form F43 in the space provided. A form F43 is invalid where this is not done. When issuing a form F43 because the amount of the relevant payments on the original form F45 was incorrect, the accountable person must ensure that the corrected figures are included in the relevant monthly and annual return forms (form F30 & form F35). As with form F45, there are no circumstances where a form F43 with nil payment can be issued. 5.4 Form F30 (monthly return) Form F30 is a monthly return that each accountable person is required to make to Revenue. It is a declaration of the total amount of PSWT deducted by an accountable person from the 1st day of an income tax month to the last day of the same income tax month. Form F30 must be filed electronically (see section 2.3) and payment of PSWT deducted made within 14 days from the end of each income tax month. For example, the form F30 for the month of March in any year must be filed, and the relevant PSWT payment made to Revenue, by 14 April of that year. Where no PSWT is deducted by an accountable person in a month, a NIL return must be filed. 5.5 Form F35 (annual return) (a) General This is an annual return made by an accountable person declaring their PSWT liability for a tax year and must be filed electronically (see section 2.3) by 15 February following the end of the tax year to which it relates. Where an accountable person deducts no PSWT in a tax year, a NIL return must be filed for that year. (b) Details to be returned on form F35 Details to be returned on the form F35 are as follows: total PSWT liability for a tax year in respect of all relevant payments made by an accountable person in that year. Where a form F43 was issued during the tax year to amend the amount of a relevant payment or the amount of PSWT deducted on an original form F45, the accountable person must ensure that the corrected figures are reflected on the form F35, total PSWT already paid to Revenue for the tax year through the monthly form F30 return procedure, the difference, if any, between the total PSWT liability for the tax year and the total amount of PSWT paid to Revenue throughout the year. Where a balance of PSWT is owed, payment of the balance of PSWT should be made electronically to Revenue at the time the form F35 is submitted. Where an excess amount of PSWT has been paid, Revenue will liaise with the accountable person. 18

19 (c) Schedule to accompany form F35 A schedule giving details of the total relevant payments made to, and the total PSWT deducted from, each specified person in the tax year must accompany the form F35. The schedule must be completed under the five headings listed on the form F35, as follows: Name of Specified Person Address PPS Number/Tax reference number Total of Relevant Payments from which PSWT was deducted Total PSWT deducted Queries regarding forms F30/F35 should be made to: Services and Transactions Taxes Unit, Collector-General s Division, Government Offices, Mill Lane, Listowel, County Kerry. Phone: or (from outside Ireland). 5.6 Requests for forms and security numbers All requests by accountable persons for forms, stationery and security numbers should be made to the Revenue office dealing with the accountable person. Accountable persons must provide the following information with their request: the name of the individual making the request, the name, address and telephone number of the accountable person, the Tax Reference Number of the accountable person, the type and the quantity of forms (or security numbers) required and, in the case of form F45, whether manual or continuous stationery version is required. 5.7 Irish version of PSWT forms Form F45 (Manual), form F43, form F30 and form F35 are available in Irish. Accountable persons wishing to use the Irish version of the above PSWT forms should inform their Revenue office in writing. 5.8 Rectifying errors (a) PSWT deducted in error Where PSWT has been deducted in error and remitted to Revenue, the accountable person should provide written confirmation to this effect (indicating the reason for the error) to the specified person. The specified person should forward this written confirmation, together with the relevant form F45, to the Revenue office that deals with the specified person s tax affairs. Revenue will, if appropriate, refund the PSWT deducted in error to the specified person. 19

20 Where the PSWT has been deducted in error but has not been remitted to Revenue, the accountable person should retrieve the form F45 from the specified person and refund the relevant amount to the specified person. Both parts of the original form F45 should be marked cancelled and retained by the accountable person. (b) Excess PSWT deducted Where it is found that excess PSWT has been deducted, the accountable person should: retrieve the form F45 that issued when the relevant payment was made, issue form F43 showing the correct details of PSWT deducted, refund the excess PSWT deducted to the specified person, and reduce the next monthly return (form F30) of PSWT made to Revenue by the amount of the PSWT overpaid in respect of the error. Where the next monthly return falls into a different tax year, please refer to paragraph (f) below. (c) Insufficient PSWT deducted Where it is found that insufficient PSWT has been deducted, the accountable person should: retrieve the original form F45 that issued when the relevant payment was made, issue form F43 showing the correct details of PSWT deducted, and remit the additional PSWT due on the payment with the next monthly return (form F30) of PSWT made to Revenue. Where the next monthly return falls into a different tax year, please refer to paragraph (f) below. (d) Payment made twice Where a relevant payment is made twice in respect of the same transaction, the accountable person should: retrieve the duplicate payment and the form F45 in respect of that payment from the specified person, mark both parts of that form F45 as cancelled and retain them together, reduce the next monthly return of PSWT made to Revenue by the amount overpaid to Revenue in respect of the error. Where the next monthly return falls into a different tax year, refer to subparagraph (f) below. (e) Payment made to the wrong person The accountable person should: recover the payment and the form F45 that was issued to the wrong person, mark both parts of the form F45 as cancelled and retain them together, issue a form F45 together with the payment to the correct specified person. While, in this instance, no amendment is required to the remittance of PSWT to Revenue, care should be taken to ensure that the schedule accompanying form F35 (annual return) accurately reflects payments made to all specified persons. However, if the payment to the correct person is made in a different tax year to the earlier payment, please refer to paragraph (f) below. 20

21 (f) Error made in one tax year and rectified in a subsequent tax year Where a PSWT error relating to a tax year is discovered after form F35 for that tax year has been filed, the error cannot be rectified by adjusting the next monthly remittance to Revenue. Instead, an amended form F35 should be completed and submitted electronically to Revenue. Where the amended form F35 results in an additional liability to PSWT, payment of that amount should be submitted electronically to Revenue. Where the amended form F35 results in an overpayment of PSWT by the accountable person, Revenue will liaise with the accountable person. 21

22 Appendix 1 - Revenue Opinions regarding Professional Services 1 Advertising Services Subject to the comments below in relation to advertising space or time, payments for advertising services are subject to PSWT. Advertising services include services involved in: designing an advertisement, and conducting an advertising campaign. Advertising services can involve the use of many other services. For example, they may involve the services of photographers, models, graphic art designers, commercial artists, freelance writers and printing. Where an advertising service is provided by an advertising agency, PSWT is to be deducted from the total payment (for all component services) by the accountable person to the agency. It should be noted that outside of the scenario outlined above, services such as photography, modelling, graphic design, commercial artistry, freelance writing and printing are not of themselves generally professional services for the purposes of PSWT. Accordingly, where an accountable person makes a payment for any such individual service directly to the person providing the service, the payment is not subject to PSWT unless such service forms part of a wider consultancy. Advertising Space or Time Where advertising space or time is provided as part of an overall professional service, e.g. by an advertising agency as part of an advertising service, the total payment for the service (including the advertising space or time) is subject to PSWT. Payments made to: an advertising medium (e.g. a newspaper), or a person acting as an agent for an advertising medium (e.g. an advertising agency) in order to obtain advertising space or time are not generally subject to PSWT. 2 Archaeology Payments in respect of archaeological consultancies are subject to PSWT. In general, payments in respect of archaeological digs or excavations are not subject to PSWT. However, where archaeological digs or excavations form part of an overall professional service, for example, an archaeological consultancy, the full amount of the payment is subject to PSWT. 3 Auctioneers/Estate Agents/Valuers Payments in respect of an auctioneer s, estate agent s or valuer s fees are subject to PSWT. Where the fee includes advertising costs, the full amount of the fee (including advertising costs) is subject to PSWT. 4 Bank Charges Payments in respect of fees, commissions and charges for banking transactions are subject to PSWT. However, the charge imposed by a bank for the ordinary servicing of a customer s current account, which is debited to the customer s current account, is not subject to PSWT. 5 Board Members/Chairpersons Payments made to chairpersons and individuals who sit on boards and committees are generally emoluments from an office chargeable to tax and subject to the operation of PAYE/PRSI. Accordingly PSWT does not apply to such payments. 22

23 6 Computer Services Payments for independent advice on the installation, development (including the development of a web site) or running of computer systems are subject to PSWT. Payments in respect of the following services are not subject to PSWT: the sale of computer hardware and software packages the sale of software packages developed by the seller. This continues to be the position where the cost of the hardware or software package includes an element of service which is not charged separately to the customer, for example: - initial analysis of the work to be computerised - development of a hardware or software package for the customer - provision of training and other back-up services maintenance of computer software. 7 Consultancy Payments in respect of any type of consultancy are subject to PSWT. Note that a service, which involves the provision of advice, is a consultancy. 8 Costs of Acquisitions/Disposals of Land or Property General Payments in respect of professional costs associated with the acquisition or disposal of property or land other than under a compulsory purchase order (see below), including payments made in respect of the professional costs of a person other than the accountable person, are subject to PSWT. Payments in respect of professional costs incurred prior to the formal confirmation of a compulsory purchase order are also subject to PSWT unless they are part of an out of court settlement (see Opinion 9 below). Property/Land Acquisitions by Compulsory Purchase Order Where property is acquired by compulsory purchase order, the following are subject to PSWT: conveyancing costs, payments made by the accountable person in respect of the accountable person s own costs. Where property is acquired by compulsory purchase order, the following are not subject to PSWT: professional costs awarded by an arbitrator. Examples include the vendor s legal costs, auctioneers fees, estate agents fees, valuers fees, etc., professional costs incurred in reaching agreement, prior to arbitration, where such costs could have been awarded by an arbitrator. 9 Costs of Legal Actions Where, under a ruling of a court, tribunal or similar body which is legally empowered to award costs, an accountable person is required to make a payment to a person in respect of professional costs incurred by that person, the payment is not subject to PSWT. This also applies where the payment is made directly by the accountable person to the person who provided professional services. The reason for not applying PSWT in these circumstances is that, once awarded, the costs are regarded as a compensation payment made by the accountable person and not a payment in respect of professional services. PSWT applies to payment of the accountable person s own costs, including any payment out of 23