It’s easy to assume a business with a cash flow problem is underperforming. In reality, plenty of profitable, well-run Irish companies with steady demand and healthy margins still hit a wall at certain points in the year. The cause is rarely performance. It’s timing: cash has to leave the business before the revenue meant to cover it has arrived. Corporation Tax is one of the sharpest versions of that problem, and it changes shape the moment a growing business crosses a threshold most owners have never heard of.

What Changes Once a Business Becomes a ‘Large Company’

Under Revenue’s preliminary tax rules, a company is treated as a “large company” once its Corporation Tax liability for the prior accounting period exceeds €200,000. That threshold catches more businesses than it sounds like it should: a single strong trading year is often all it takes.

For companies below that threshold, preliminary tax is straightforward: pay 90% of the current year’s liability, or 100% of the prior year’s, in a single instalment before the year ends, with the balance settled on filing. Cross the €200,000 mark, and the payment structure changes entirely, moving from a single payment to instalments spread through the accounting period itself.

How the Two-Instalment System Works

For accounting periods longer than seven months, large companies pay preliminary tax in two instalments. The first is due on the 23rd of the sixth month of the accounting period, set at the lower of 45% of the current year’s expected liability or 50% of the prior year’s. The second instalment falls on the 23rd of the eleventh month, bringing the total paid up to 90% of the final liability. The remaining balance is due with the CT1 return, filed and paid within nine months and 23 days of the year end via ROS.

Accounting periods shorter than seven months require 90% of the liability in a single instalment instead. Either way, the practical effect is the same: tax now leaves the business while the accounting year is still running, based on an estimate, not a confirmed figure.

Why This Catches Growing Businesses by Surprise

A business that has traded comfortably under the €200,000 threshold for years can cross it after one particularly strong year, and the change in payment structure applies from that point forward. The first instalment can land mid-year, well before the year’s profit is banked, at a point when working capital is often already committed to stock, payroll, or supplier terms.

The cost of getting behind has risen too. Revenue charges interest on late or underpaid instalments at a daily rate of 0.0219%, equivalent to roughly 8% a year, and that interest cannot be appealed once charged. For a business that hasn’t modelled the new payment schedule in advance, the shift from a single post-year-end payment to in-year instalments can be a genuine cash flow shock.

How Revenue-Based Finance Helps Bridge the Gap

Take a business with monthly card takings of €15,000 facing a preliminary tax instalment of €28,000 due in a few weeks. Current reserves are already committed to stock and wages. Drawing the instalment from working capital is possible, but it leaves the business exposed: a late customer payment or a quiet trading week could leave supplier invoices unfunded.

A revenue-based cash advance offers another route, covering the instalment upfront so reserves stay where they are. Rather than an interest rate that accrues over time, this kind of funding carries a single fixed fee agreed at the outset, repaid through a set percentage, or “split”, of card sales. Repayments rise and fall with trading, smaller in quieter weeks, faster when trade is strong, rather than concentrating the cost into one damaging withdrawal.

FAQs

How do I know if my business is a ‘large company’ for preliminary tax?

If your Corporation Tax liability in the previous accounting period was above €200,000, the two-instalment regime applies to your current period.

Can the interest on a late instalment be reduced or appealed?

No. Once Revenue charges interest on an underpayment, it cannot be appealed or reduced, so it’s worth avoiding altogether where possible.

Is unsecured funding available specifically to cover a tax bill?

Yes. Revenue-based finance and unsecured business loans are commonly used to bridge a preliminary tax instalment without disrupting stock or payroll budgets.

If a Corporation Tax instalment is landing at an inconvenient time, funding built around your trading pattern can keep working capital where it’s needed.