Revenue Auditing TDs’ & Senators’ Expense Claims

March 21, 2013

RTE News are reporting this evening that a Revenue are currently carrying out a tax audit on the Houses of the Oireachtas.

This is the public body responsible for the payment of expense allowances to TDs and Senators.

Oireachtas Revenue Audit - RTE

Members of the Dáil and Seanad Éireann enjoy expense allowances (technically termed the “Parliamentary Standard Allowance”) that comprise two elements:

  • Travel and Accommodation Allowance. This is based on the distance to Leinster House from the Member’s home, and verified by Leinster House attendance records.
  • Public Representation Allowance. This is  to cover office and other expenses, which can be claimed on a flat-rate unvouched rate of up to €15,000 per annum (nice!) or on a vouched basis up to €25,700 per year (nicer still!)

The Oireachtas.ie website includes a wealth of information on both allowances and the claims made by each lucky recipient.

It will be interesting to see what view Revenue take of the generous expense regime enjoyed by our TD’s and Senators.

Revenue insist that unvouched expense payments to public- and private-sector employees and directors must in all cases be treated as taxable pay, although our leading politicians have traditionally appeared immune from such inconvenience.

Is this about to change?


€20 Will Solve Mayo Council’s Irish Cheques Fiasco

March 15, 2013

Mayo County Council are in hot water today for refusing to accept Household Charge cheques written in Irish,  according to a report in today’s Irish Times.

The local authority had blamed their bank, AIB, for refusing to process cheques in the name of “Comhairle Contae Mhaigh Eo”, the local authority’s official title as Gaeilge.

Mayo County Council

Apparently, the bank had told Mayo County Council that it would not accept cheques in Irish from January 2nd, 2013.  For their part, AIB have since stressed that they do accept cheques made out in Irish, and denied any recent change in policy.

I’m amazed that Mayo County Council are unaware that there is a very easy way to resolve this problem. They can register “Comhairle Contae Mhaigh Eo” (or any other title) as a business name with the Companies Office, by completing a simple RBN2 form and paying a €20 fee.

Once the name is registered, they will receive a Certificate to that effect. They simply present the Certificate to their bank and the bank is then free to process cheques made out to the registered business name.

And it only costs €20 – a tiny fraction of the resources the Council has already exhausted in returning unused cheques to householders, and a mere drop in the ocean compared to the cost of their recent court prosecutions for non-payment of the household charge.

The full Irish Times report is here.


Non-Residents: How to Avoid a 20% Tax Deduction on Your Irish Rents

March 14, 2013

If you are an Irish non-resident with Irish rental income, your tenants must deduct 20% tax from the rents they pay to you. If you appoint a ‘Collection Agent’ you can avoid the headaches that this can involve.

The Irish Income Tax code requires tenants to deduct 20% tax on rents paid to a non-resident landlord. This requirement does not apply if you nominate an Irish-resident person as  your ‘Collection Agent’.

Rental Property

The ‘collection agent’ effectively acts as your nominee for Irish tax purposes.  It is possible for a family member or close friend to act as your ‘collection agent’ as they normally don’t have any duties  to perform in this capacity, although some people prefer to nominate their letting agent.

Take note that, if you have engaged a letting agent who is collecting the rents and engaging with tenants on your behalf, they are not actually obliged to deduct 20% tax from you, once you nominate either them or another Irish-resident person as your ‘Collection Agent’ for Revenue income tax purposes.

Acting as a ‘collection agent’ doesn’t affect or impact upon the nominated person’s own tax affairs in any way. It is still your responsibility, as property owner, to file your annual tax return and pay your tax liability each year.

If no ‘collection agent’ is appointed, the tenant must deduct tax at source from the rents and pay it to Revenue. As you can imagine, this sort of situation can get messy, especially if the tenant deducts 20% from the rent payments but ‘forgets’ to pay the deductions to Revenue.  In my experience, this potential nightmare is best avoided.

The ‘collection agent’ regulations may seem complex, but thankfully once everything is done properly, they are relatively straightforward – they only get complicated if the landlord fails to file tax returns or pay tax bills, in which event Revenue chase the ‘collection agent’  for them.

See my previous blog post: Irish Property, Living Abroad – What To Do About Tax  or Revenue’s Guide to Rental Income.

Ease your Irish Tax Return worries by getting in touch with Thomas McGibney & Company today.


Revenue’s Property Tax Valuation Guide is Live

March 11, 2013

Revenue have now published their online map-based Property Valuation Guide for the new Local Property Tax or LPT.

You can use this guide to check the average market value of properties in each locality. This should help you to assess the value of your own property for LPT purposes.

Revenue Local Property Tax Valuation Guide

Revenue stress that their guide outlines the “average market values of properties in a given locality” and state that it “offers an indicative valuation band for properties depending on type, age and location”.

For some reason (which escapes me), users must specify whether or not the property was “Built Before (the year) 2000”.

I’m not sure what particular relevance the year 2000 has as a cutoff point in assessing the value of a property based on its age, but I’m sure Revenue will confirm their logic in due course.

It is important to note Revenue’s own warnings that the guide “does not provide market values for individual properties” and “there are always properties in an area that differ from the average”.

In other words, you need to use your own judgment in deciding the appropriate value for your property.


Revenue Tax Probe of Contractors Goes Nationwide

March 11, 2013

The recent Revenue review of independent contractor companies in the South West region is now to be extended nationwide, according to a report today from Chartered Accountants Ireland.

Their new “Services Contractors Project” targets companies which operate as a vehicle to enable individuals to provide contracting services to a larger company.

Revenue

Revenue’s Assistant Secretary Tony Buckley wrote to the Irish Taxation Institute in January confirming that their review of contractors had already commenced in the South West region (counties Cork, Limerick, Kerry and Clare) and was “likely” to be extended to other Revenue Regions in due course.

Revenue’s main concern seems to be that some companies may be charging an unduly high level of expenses against their taxable income.

Of course there may be valid reasons for a company to have significant deductible running costs, but Revenue’s focus is on those cases where expenses may have been exaggerated.

They have already invited contractors in the South West region to review their affairs and make voluntary disclosures of any tax underpayments.

Disclosures must also include interest, and penalties as set out for “deliberate default” in the Code of Practice for Revenue Audit:

  • unprompted disclosure (i.e. where no audit or investigation notice has issued) –  penalty of 10% of the tax underpayment.
  • prompted disclosure (made after receipt of a audit notice) – 50% penalty;
  • failure to make a complete disclosure,  75% – 100% penalty.

It now appears that contractors nationwide will now be asked to undertake this review, and to make good any tax underpayment.

If you have concerns about your own position, you should review the implications of this news with your accountant or tax advisor, and if necessary, seek independent professional advice, as soon as possible.

Today’s Chartered Accountants Ireland report is here.


The Local Property Tax: How Will It Work?

March 8, 2013

Here are the key features of the Local Property Tax (LPT), as outlined by Revenue Chairman Josephine Feehily yesterday:

The LPT Basics

The Local Property Tax is a self-assessed tax. The charge for 2013 is based on each property’s market value on 1 May this year.

Property values are arranged into bands – from €0 to €100,000 and then in €50,000 bands.

Your tax liability is calculated at 0.18% of the mid-point of the relevant band,  eg on a property valued between €200,000 & €250,000, the charge will be €225,000 * 0.18% = €405.

Local Property Tax LPT

50% of this sum is payable this year. The full amount will be payable each year from 2014 onwards.

The 1 May 2013 valuation will apply up to and including 2016. This will hold regardless of improvements, extensions, repairs or property market movements in the meantime.

The Local Property Tax Register

Revenue have compiled a register of residential properties and their owners. They freely acknowledge that this will inevitably contain errors.

Individuals who receive letters in error should contact Revenue immediately so they can correct the register. If no contact is made, further letters, and enforcement, will issue.

Property Valuation

It is up to the property owner to decide the market value of their property.

Revenue suggest that each property owner can assess their property’s value by using the official Property Price Register, or by accessing data from local estate agents etc.

They will also publish an online interactive guide providing indicative property values for different property types e.g. detached, semi-detached, apartment, etc. based on the age of the property, and average prices in each Electoral District.

However if a property has unique features, ie , is smaller or larger than average, is in a poor state of repair or has exceptional features, these should be considered in assessing its value.

Submitting the LPT Return

LPT returns can be completed and submitted online or on paper. The deadline for paper returns is 7 May and for electronic returns is 28 May.

If you own multiple residential properties, or if you are already obliged to file your tax returns online,  you must file your LPT return online.

Paying the LPT

The following payment options are available:

  • Single Debit Authority; (debited on 21 July)
  • Deduction at source from a salary or occupational pension;
  • Deduction at source from  Department of Social Protection or Department of Agriculture payments.
  • Direct Debit (debited from 15 July)
  • Debit/Credit Card online;
  • Cash payments and over the counter Debit/Credit Card payments via An Post, Payzone or Omnivend.

The Revenue Estimate

Every property owner will receive a Revenue Estimate. This is the amount Revenue will collect if no LPT return is filed. However, the  valuation remains the sole responsibility of the property owner. Once you file an LPT return, the Revenue estimate becomes irrelevant.

What will happen non-filers?

Revenue will pursue non-filers to collect the Revenue Estimate.

Self-assessed taxpayers who haven’t filed their LPT Return will also incur an automatic late filing surcharge on their income tax return. This means their income tax liability will increase by a further 5%-10% of their liability.

It will also be impossible to receive a tax clearance certificate if your LPT Return and payment are overdue.

For more…

For more information, you can refer to the Revenue Local Property Tax Guide  and Frequently Asked Questions

Local Citizens Information Centres can also advise on the tax, or you can  contact Revenue’s LPT Helpline on 01 7023050 (or the more expensive 1890 200 255). Aertel page 593 also outlines information on the Local Property Tax.

Yesterday’s Local Property Tax Statement by Revenue Chairman Josephine Feehily is here.


What Will My Property Tax Return Look Like?

March 8, 2013

Here is a sneak preview of the Local Property Tax Return (Form LPT1) that will issue to all (or most) households in Ireland next week.

Revenue will issue approx. 1.66 million of these forms from next Monday.

Sample form Form LPT1 for Local Property Tax

You can download and view the sample form in more detail on Revenue.ie.

Instead of completing the paper form to file your Local Property Tax (LPT) return and pay your liability, I recommend that you go online to do so.

This will be faster, easier and safer than relying on the paper form.

The Revenue online LPT facility will be available on revenue.ie from next Monday, 11 March.