Tax Relief on Pension Contributions

I have run into some problems with tax relief on my pension contributions. I have had a PRSA for a number of years and about four years ago joined an occupational pension scheme. I kept contributing to the PRSA albeit at a reduced level. I continued to claim tax relief on my PRSA contributions at the end of each year and was always refunded accordingly.

Revenue have now told me I wasn't entitled to be getting relief on PRSA and occupational pension scheme at the same time (in circumstances I only had one source of income).

I have two issues, firstly I can't see the legislative basis for this 'rule' or 'policy' I have asked revenue to refer me to the legislative basis by phone on two occasions but they could not do so. I have seen the revenue policy paper setting this rule out, but if there is no legislative basis it seems like revenue policy directly goes against stated government policy of encouraging people to save for their retirement.

Secondly, if Revenue had brought this to my attention in the first year it occurred (2010 I think) I would have changed my pension saving methods and stopped contributing to PRSA and made AVCs to occupational pension instead. Instead they waited until I submitted my 2013 claim to bring this policy to my attention.

Can anyone give me some advice on this.

I plan to appeal to the appeal commissioners but i assume there is little or no chance of success. To appeal is it merely a case of setting out the grounds of the appeal in writing?

Thanks in advance.

The applicable legislation is at S.787E of TCA97.

Guidance notes (plain English version of the statute): [broken link removed]

The actual wording of S787E(3) is:
"(3) [Where during a year of assessment an individual is a member either of an approved scheme or of a statutory scheme (hereafter referred to as a "scheme") in relation to an office or employment, not being a scheme under which the benefits provided in respect of that service are limited to benefits of a kind referred to in paragraphs (b) and (c) of section 772(3), including any similar benefit provided under a statutory scheme established under a public statute,]1 the following provisions shall apply, that is to say―
(a) relief shall be allowed under this Chapter as regards relevant earnings from that office or employment only in respect of contributions that are additional voluntary PRSA contributions,"

Unless your PRSA Contributions were AVCs, Revenue are applying the law correctly so you have nowhere to go; the Appeal Commissioners role is limited to determining based on the facts whether the law has been correctly applied. Your grounds of appeal would have to be based on an error in fact, or in application of the applicable legislation, neither of which are apparent here. In the absence of valid grounds of appeal, the Inspector cannot and will not list an appeal for hearing. You would then have to appeal their refusal to admit an appeal! At which point the appeal commissioner would send you packing.

The system is self assessment, so by claiming it you're stating that you are entitled to the relief - they can only deal with your error as and when they become aware of it.

I'm not familiar with the details of PRSAs, however I do believe it's up to you and your pension company to decide what is and what isn't an AVC. Ideally you want as much as possible classed as an AVC as that's where you've most flexibility, and seemingly the clearest situation regarding tax relief.

You could talk to whoever handles your PRSA and see if there's some way you can retrospectively class your contributions (or at least some of the recent ones) as AVCs. Also double check that they're not already AVCs though it sounds from your case as if Revenue have already checked with the pension company to see if you'd fallen into what seems a trap for people in your situation.

I would have up to now assumed if your total contributions are under relevant limit for your age and salary it would get tax relief. It makes no sense for any money to go into a pension if there's no tax relief.

Have you told the Revenue that it was an honest mistake and because you were under the tax relief limits, it is a matter of making contributions into the incorrect product more than anything else?

Ask them if it would be acceptable that you can have the contributions unwound and transferred into a PRSA AVC structure? Maybe talk to someone in the life office about this first to see if they will do it for you.


Steven
www.bluewaterfp.ie

Thank you for the helpful replies I will let you know if I have any joy (I have no expectations that I will have!).