Filling out tax returns is a relatively pain-free experience for many, particularly if they make use of all the free advice and expert help to hand, writes Caroline Madden

For many people, the prospect of filling out a tax return is right up there with a trip to the dentist - a painful experience to be put off for as long as possible. But with the October 31st tax return deadline looming, taxpayers within the self-assessment system can procrastinate no longer.

The rush is on to get their 2006 tax affairs in order. That pile of bank statements, receipts and dividend vouchers gathering dust in a corner all year must finally be tackled.

As well as filing a tax return for 2006, self-assessed taxpayers must also settle certain tax bills with Revenue by the end of this month. Any balance of income tax due for 2006 must be paid, and a preliminary tax payment, which is an estimate of the income tax payable for 2007, must also be made.

Any capital gains tax (CGT) liability resulting from the sale of an asset (for example, if shares were sold at a gain) between January 1st and September 30th, 2007, must also be paid by the October 31st deadline.

This self-assessment - or "pay and file" - system of taxation applies primarily to self-employed people running their own business, such as shop owners, solicitors, farmers and publicans.

However, the self-assessment net extends further than many people realise.

Take for example an individual receiving non-PAYE income, such as rent or dividends. If the tax due on that income cannot be collected through the PAYE system, then they will be brought into self-assessment.

However, if this non-PAYE income is relatively small, it may be possible for Revenue to collect all of the tax due by adjusting the person's tax credits and bands. In this situation, the taxpayer can avoid the self-assessment system.

In the case of deposit interest, the Dirt (Deposit Interest Retention Tax) deducted by the bank will generally discharge any income tax liability. Billy Burke, tax director at KPMG, points out that PRSI may still be due on the interest but that this tends to be minimal. "In practice, it tends not to be an issue," he says.

Strictly speaking though, such a liability has the potential to bring the taxpayer into the self-assessment net. Anyone concerned or unsure about their obligations should therefore seek advice, either from a tax advisor or directly from Revenue.

Employees who have exercised share options should be aware that they are required to file a tax return.

Similarly, opening a foreign bank account or investing in an offshore fund or life policy during the tax year in question will result in a pay and file obligation.

Individuals who have realised a capital gain on the sale of an asset during the tax year are obliged to submit a tax return, as are company directors.

Anyone with a niggling suspicion that they are - or should be - in the self-assessment system should never assume that they're off the hook simply because a blank tax return has not yet popped through their letterbox. The onus is on the taxpayer to pay and file on time, regardless of whether they have been contacted by Revenue.

Missing the tax return deadline can result in a surcharge being added to the person's income tax liability.

This surcharge amounts to 5 per cent of their tax liability if the return is filed within two months of the deadline, rising to 10 per cent once the return is more than two months overdue.

Revenue also cracks down on dawdlers when it comes to preliminary tax payments, charging interest at approximately 1 per cent per month from October 31st onwards, until the tax is paid.

Filing a tax return is also an opportunity for individuals to claim any tax reliefs to which they are entitled. For example, relief is available for medical expenses and non-routine dental procedures such as root canal treatment.

Although many taxpayers don't bother making a claim, it is worthwhile taking advantage of all entitlements that can reduce your tax bill.

As announced in last year's budget, many property-based tax incentive schemes, such as the popular Section 23 relief, will be phased out by July 31st 2008. However, the phasing-out period doesn't kick in until this year, so full tax relief for investments in these property schemes can still be claimed for the 2006 tax year.

Once the tedious work of trawling through all your records and accounts is done, and your tax return is finally signed, sealed and delivered, what next? It can take Revenue several weeks or even months to process a tax return, so don't panic if you don't receive any correspondence immediately.

Once the return is processed, a Notice of Assessment will be sent to you showing your tax liability for 2006. Any preliminary tax paid by October 31st 2006 will be credited against this liability.

At this point, it is important to check the Notice of Assessment carefully against the details you submitted on your tax return. If you spot any discrepancies, contact your inspector of taxes within 30 days and ask for an amended assessment.

If, on the other hand, you realise that you made an error when completing your tax return, simply contact your local tax office and explain the mistake. Revenue should then issue an amended assessment.

Like those dreaded visits to the dentist, completing a tax return often turns out to be a relatively pain-free experience, particularly if you make use of all of the free advice and information at hand.

A number of relevant leaflets and guides can be downloaded from Revenue's website (www.revenue.ie), and useful information can also be found on the Irish Taxation Institute's website (www.taxireland.com).

However, if your tax affairs are particularly complex, it may be better to pay a professional to prepare your tax return, and ensure that you are fully tax compliant.