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  #1  
Old 03-06-2013, 12:33 PM
poppie poppie is offline
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Default In trouble with revenue, undeclared rental income

So I'm one of those people that has my head in the sand when it comes to anything tax related. Your worse case scenario really! Every revenue letter that comes in post fills me with absolute dread! Yearly I see my accountant he tells me the amount, I write the cheque after that I'm absolutely clueless! On Friday I received the worst kind of revenue letter and I'm in so deep I don't even know where to start to get out.

I wish I could make a long story short but I if I leave any details out I'll just be back on again...

Basically I bought my apartment start 2007. I lived in my apartment for almost three years until the Nov 2009 when I moved out and in with my partner now husband. During the three years I lived in my apartment I always rented out a room. In Oct /Nov 2009 I rented the apartment out to a couple. I didn't bohter to change my addresses, just paid for a mail divert...and off I went!

I'm self employed as a sole trader. I have an "account" I put that in inverted commas as I now have serious doubts about him! My accountant was always aware of the situation both the room rental and then renting out the apartment. And every year the apartment came up for discussion he just said "sure we leave it another year...if anything comes up we'll just stick in a return"

The past few months a lot has come up! In Sept last year I went from self - employed to PAYE. My husband received a bill back dated to 2009 for single parents allowance and I received a bill from TRS back dated to the date of our marriage April 2011, for morgage interest relieve. I paid my bill and my husbands is currently taken out of his tax credits.

At the time this happend I did ring my accountant and his advice was....to write in an appeal( ie. just a letter) l saying that I was just living with my husband from time to time and they might review 2009 and 2010 single parent allowance. So we wrote a letter and after waiting 4mths we got a letter back from revenue asking for a range documents of prove I wasn't living with my husband 2009-2010. We could provide some of the documents but not all of them so we decided to just leave things and payup. As the truth was I was living with him since Nov 2009.

And then Friday's letter arrived! Revenue ask for details of Rental Income years 2009- 2013 and to include tenant details, Claims for morgage intrest relief used as a deduction only allowable with PRTB registration.WHAT IS PRTB?? Never heard of it!

And to confrim my place of residence form 17/11/2009? Not sure why this date?

All to be returned within 14 days.

So I just want this sorted! Im 36 weeks pregnant and this the last thing I need!

So first question, do I ring revenue and engage (knowing my ignorance about tax affairs I'll land myself in it even deeper!!) or do I find a tax advisor and do all communication through them?

If it is the latter can you please, please, please recommend a tax advisor (dublin/meath) that deals with revenue on a regular basis and knows all about getting people out of trouble!

In regards with Tentants Details, do they need the names of the room rentals aswell ( both were friends of mine?) I don't think my accountant did anything about the room rentals either.

Regarding my current tenants, its the same lady, her mother and her son since 2009 but the man has changed.There is no up to date rental agreement, when the couple split I just never bothered to make her sign agreement with her details on it.

Futhermore in regards to prove of my address some of my addresses on bills still with my apartment and some with my huband.

And my BIGGEST worry is that even though I want to pay up and get it sorted, will my husband now get into trouble for writing that stupid appeal letter saying I was only living with him from time to time. As you can imagine I want to kill my current account for his "poor" advice!!

So I need any help or advice you have and if anyone has ever been through something similar any encourgement that it can be sorted will be much appreciated. Thanking you in advance!!
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  #2  
Old 03-06-2013, 12:43 PM
Bronte Bronte is offline
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Register today with the PRTB is your first step, do it online now. This is quite a tricky area and is untested as far as I know. That is whether you registering now, 4 years late means you're ok for the last 4 tax years at least. You abolutely need a realy good accountant.

As far as I understand the rules you will be able to go back 4 years on the PRTB website but no further.
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  #3  
Old 03-06-2013, 06:59 PM
oldnick oldnick is offline
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One of the weirdest posts I've ever read...

This is going to look rude but really meant as advice.

You dont' seem able to deal with this and in addition to tyhe sensible advice of Bronte to immediately get a good accountant why, in your situation, are YOU dealing with this and not your husband?

Just tell your husband to deal with this with the accountant.

A couple of points which I'm sure your new accountant will tell you:-

1) Any owner of property can, if still residing in that property, let room/s and is not liable to tax if the rent is under 10k p.a. nor is obliged to register with PRTB (which I'm sure by now you've read all about). Your tax liability started from end 2009, not before.

2) It would appear that Revenue know or are confused ,perhaps from what you/your husband told them, that from November 2009 you had let the apartment. That is why they are asking for confirmation/details.

Revenue want money ,not to get you "in trouble" . You'll just pay the tax that the rest of us have paid, the only "trouble" being a penalty and interest payments (and a few hundred to the accountant!)
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  #4  
Old 03-06-2013, 07:31 PM
putsch putsch is offline
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Quote:
Originally Posted by oldnick View Post
why, in your situation, are YOU dealing with this and not your husband?

Just tell your husband to deal with this with the accountant.
This advice would have sounded a bit weird in the 20th century let alone the 21st century - not to mention on the anniversary of the death of Emily Wilding Davison!

From reading the posts I am assuming that the let property that is giving rise to the revenue concerns in owned by the poster who in turn is then liable for any unpaid taxes. What you seem to really need is a good accountant - unfortunately I can't give you advice on this as after 10 years I'm looking for the same myself!!
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  #5  
Old 03-06-2013, 08:22 PM
Luternau Luternau is offline
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I would say the comment referred more to the OP not needing the stress of sorting this out whilst 36wks pregnant-as opposed to it being mans work!

I am not sure if you can backdate registrations with the PTRB to allow the interest (assuming there is interest) to qualify as a deductable expense. Hopefully you can-as it will reduce the tax bill considerably.

You are going to have to give the Revenue all the information they require. They probably know more about you than you think at this stage and want to confirm the information. They will then either issue a tax assessment for the years in question or audit you (as you have made returns already).

The income from renting a room is exempt from tax (so long as you were living there yourself) but is supposed to be declared on Form 11.

Please be assured that this is all easily rectified. Your accountant has given you very bad advice if he was as casual about this extra income as you say! Maybe it's time to change!

Best of luck!
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  #6  
Old 04-06-2013, 08:32 AM
Bronte Bronte is offline
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Originally Posted by T McGibney View Post
Of course you can backdate PRTB registration and Revenue must accept this - there is nothing in legislation that allows them to refuse to do so.

.
My own accountant told me when this PRTB thing all started that while you can backdate your PRTB registration, as in the PRTB will allow this, but revenue might have an issue with it. For the life of me I cannot remember why now. Are you 100% sure this is correct. It was something to do with what you declared on your tax return I think, that if when you filed it and you weren't registered than you couldn't later backdate this - sorry this is a bit vague, I'll try and see if I have something in writing about it. It was all new at the time etc.

Poppie should change her accountant, he already apparently told her to lie and she's been caught out in this and also seems to have a very cavalier attitude to tax returns. In addition he never seemingly advised her to get PRTB registered, my own accountant always asked me to supply him with the PRTB regisistration numbers and for the last couple of years I have to send him the actual registrations. (I wonder is that not normal practice for all accountants? )
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  #7  
Old 04-06-2013, 09:04 AM
Bronte Bronte is offline
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I managed to find something on this issue about revenue/PRTB. The thinking might have changed on the advise my accountant gave me in the past. He based it on an ebrief from 2007 and whatever else accountants had access to.

This issue was that it was not clear, at that time, from the PRTB registrations when the tenancy was registered. And you could register late. So it might not be clear that the tenancy was registered on time. For revenue purposes. And that therefore it's possible mortgage interest relief was not properly claimed.

Does that make sense Tommy?

Where's Mandelbrot when you need him. We could have a very interesting debate on this topic.
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  #8  
Old 04-06-2013, 09:56 AM
mandelbrot mandelbrot is offline
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I'm heee-ere!

Wow, tempers are short this morning, I'll put it down to the hot weather

As Tommy said, you can of course register a tenancy late and thereby qualify for interest relief - it is set out in Revenue's Tax & Duty Manual 04-08-10 (http://www.revenue.ie/en/about/foi/s...?download=true) as follows (para. 4):

"Late Registration:
While new tenancies should be registered within 1 month of their commencement, provision is also made in the Act for late registration at double the normal registration fee. An acknowledgement from the PRTB confirming registration in the case of a late registration will be accepted by Revenue as evidence that a chargeable person has complied with part 7 of the Act. However, a chargeable person claiming an interest deduction in his or her return must be in a position to indicate compliance with the Part 7 requirements at the time of making the return.

Interest relief that has been denied for a particular chargeable period because a tenancy was not registered by the return filing date for that period can subsequently be restored if the landlord avails of the late registration facility, subject to the usual 4 year time limit on claims for repayment of tax."


The issue for the OP here is that she has knowingly filed an incorrect return, and depending on the view taken by the Revenue officials dealing with her case this may result in a charge to interest & penalties arising.
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  #9  
Old 04-06-2013, 10:11 AM
T McGibney T McGibney is offline
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Quote:
Originally Posted by Bronte View Post
my own accountant always asked me to supply him with the PRTB regisistration numbers and for the last couple of years I have to send him the actual registrations. (I wonder is that not normal practice for all accountants? )
That is a pointless exercise. It is impossible for your accountant to verify from registration copies or numbers whether or not you have complied with the Residential Tenancies Act by registering all tenancies. Hence logging reference numbers etc is superfluous on his part.
Quote:
Originally Posted by Bronte View Post
I managed to find something on this issue about revenue/PRTB. The thinking might have changed on the advise my accountant gave me in the past. He based it on an ebrief from 2007 and whatever else accountants had access to.
As a professional, he should have read the legislation, which is quite clear. Relying on eBriefs etc is all well and grand, but eBriefs are not law.
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Old 04-06-2013, 10:24 AM
poppie poppie is offline
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Thanks thanks and thanks again!!!
You have no idea how very grateful I am for all your advice! Iím on registering with PRTB as we speak. I just got all the tenants PPS noís.
I was up last night until 1.30 am searching the internet for accountants and recommendations for accountants experienced in dealing with Revenue on a regular basis. Unfortunately I itís like looking for a needle in a haystack! I finally resorted to ringing a friend also a sole trader and a landlord. Her accountant gave her all the appropriate advice and his firm seem a bit bigger than my ďone man bandĒ....rubbish band at best! Iím still nervous as my previous accountant was also recommended by a friend. So again any recommendations would be soooo helpful. I trawled the recommendation posts on this website and there is a lot of people asking but very few actual recommendations. I vowed if I get this sorted I will definitely post who got me through it!
Thanking you all again and please keep it coming any ideas suggestions or experience with something similar would be greatly appreciated.
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Old 04-06-2013, 10:34 AM
mandelbrot mandelbrot is offline
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Quote:
Originally Posted by T McGibney View Post
That is a pointless exercise. It is impossible for your accountant to verify from registration copies or numbers whether or not you have complied with the Residential Tenancies Act by registering all tenancies. Hence logging reference numbers etc is superfluous on his part.
Better than nothing I suppose - out of curiosity how do you verify your clients' compliance?
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  #12  
Old 04-06-2013, 10:38 AM
mandelbrot mandelbrot is offline
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Poppie, I hate to be the bearer of further bad news but you should also brace yourself for owing more TRS back to Revenue than they've sought so far - you stated they have clawed back TRS from your date of marriage in 2011.

However, you will have to declare rental income from Nov 2009, and in doing so will be seeking to claim a deduction for the mortgage interest as an expense. You cannot claim TRS and a rental expense for the same interest (that would be getting double relief), so unless the Revenue person dealing with you has mush for brains they'll be asking for another 18 months' worth of TRS back from you.
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Old 04-06-2013, 10:45 AM
Bronte Bronte is offline
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Quote:
Originally Posted by T McGibney View Post
That is a pointless exercise. It is impossible for your accountant to verify from registration copies or numbers whether or not you have complied with the Residential Tenancies Act by registering all tenancies. Hence logging reference numbers etc is superfluous on his part.

As a professional, he should have read the legislation, which is quite clear. Relying on eBriefs etc is all well and grand, but eBriefs are not law.
Goodness Tommy you're having a bad hair day today. First Luternau and now me.

Obviously my excellent accountant, who I couldn't praise enough is not checking if the numbers are real. What's he's doing is making sure by actually requesting the PRTB confirmations that us negligent landlords don't get into a lot of bother. He's keeping us on our toes. And I match the confirmations per property and per unit. I do up an excel of everything. That reminds me now, maybe I should have sent him off the NPPR confirmation as well, that's a lot easier as it's only one document unless all the paper and email confirmations I have from PRTB over the years.

And being excellent of course he doesn't rely on just ebriefs, he goes to conferences and trainings etc.

Poppie, if your looking for an accountant the poster T McGibney is one, though I'm not sure he's in the busines of trying to deal with your fine mess. You should expect to pay a good price for this first year, after this it will be plain sailing.

Don't assume that a bigger accountancy practise is better, my experience of professionals of any field is that one man bands are excellent.

Good to know someone is actually listening to the advise on here and has already begun to sort out the PRTB.

That reminds me Poppie, make sure you register for the NPPR and the househhold charge today too. The NPPR is going to cost you I think, look away now if you're going to be upset. 4K. Household charge is not so bad at about 130 or maybe 200 Euro. The fines built into the NPPR means that you should pay immediately.
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Old 04-06-2013, 10:46 AM
T McGibney T McGibney is offline
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Quote:
Originally Posted by mandelbrot View Post
Better than nothing I suppose - out of curiosity how do you verify your clients' compliance?
There is no point in us even attempting to verify this. We caution our clients accordingly, in writing, when they receive their annual tax return. It is their responsibility to comply. If they have a query or difficulty they can call us.
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Old 04-06-2013, 10:52 AM
T McGibney T McGibney is offline
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Quote:
Originally Posted by Bronte View Post
Goodness Tommy you're having a bad hair day today. First Luternau and now me.

Obviously my excellent accountant, who I couldn't praise enough is not checking if the numbers are real. What's he's doing is making sure by actually requesting the PRTB confirmations that us negligent landlords don't get into a lot of bother. He's keeping us on our toes.
Sorry, my criticism isn't personal and apologies in advance if it has appeared as such.

This has nothing to do with real or fake numbers. It is to do with the issue that having a PRTB registration number is not in itself de-facto evidence of compliance with the Residential Tenancies Act.

An example of a breach (which I'm told is common) would be where a new tenancy is not notified to the PRTB and the previous tenancy registration is carried forward. The accountant has no way to verify whether or not this has happened.

I personally believe that routinely collecting a landlord client's PRTB confirmations might well communicate a false sense of comfort to them if they have inadvertently or otherwise broken the terms of the Act, even if they can produce continuous registration confirmations.
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Old 04-06-2013, 10:58 AM
Bronte Bronte is offline
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Quote:
Originally Posted by T McGibney View Post
Examples would be where a new tenancy is not notified to the PRTB and the previous tenancy registration is carried forward. The accountant has no way to verify whether or not this has happened.
What happens for me now, and I have a few property units, is that any new registrations I have to give a copy to the accountant. The procedure has evolved as we go along. It means that every year I double check that everybody is registered etc, so that I cannot get it wrong by forgetting.

Where the tenancy is carried forward I duly document that on my excel etc.

What happened in the cases where there was a 'breach'? Did revenue accept a backdating?
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Old 04-06-2013, 10:58 AM
mandelbrot mandelbrot is offline
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Quote:
Originally Posted by T McGibney View Post
There is no point in us even attempting to verify this. We caution our clients accordingly, in writing, when they receive their annual tax return. It is their responsibility to comply. If they have a query or difficulty they can call us.
I queued that one up nicely for you, knew that's what you'd say, but I just wanted it explicitly said so that readers might realise that it's actually not the accountant's job to do all the compliance for their client.

However from a purely pragmatic and practical point of view - in the event of an audit, I would expect that most auditors will simply ask for the same information as Bronte's accountant above, and unless there is some kind of glaring gap there won't be a problem (compliance with the spirit of the law rather than necessarily the finest print of it, if you like).
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Old 04-06-2013, 11:00 AM
T McGibney T McGibney is offline
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Quote:
Originally Posted by Bronte View Post
What happened in the cases where there was a 'breach'? Did revenue accept a backdating?
Yes. They actually have no power to refuse to do so. But if an audit has already started, things could get very messy.
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  #19  
Old 04-06-2013, 11:02 AM
Bronte Bronte is offline
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Quote:
Originally Posted by mandelbrot View Post

"Late Registration:


A) However, a chargeable person claiming an interest deduction in his or her return must be in a position to indicate compliance with the Part 7 requirements at the time of making the return.

B) Interest relief that has been denied for a particular chargeable period because a tenancy was not registered by the return filing date for that period can subsequently be restored if the landlord avails of the late registration facility, subject to the usual 4 year time limit on claims for repayment of tax."


C) The issue for the OP here is that she has knowingly filed an incorrect return, and depending on the view taken by the Revenue officials dealing with her case this may result in a charge to interest & penalties arising.
Thanks for coming to the rescue, I've put letters on the points, my accountant in the past was obviously rightly concerned about A, but it seems by the time of this latest briefing in 2010 that it was clarified by B, so that in fact you can do late registrations even 4 years late as is the case with Poppie.

As for C, if poppie comes clean now and is very lucky they might be lenient on her. Hopefully for her she's running at a loss with the mortgage interest relief, even if she overclaimed the TRS.
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Old 04-06-2013, 11:05 AM
Bronte Bronte is offline
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Quote:
Originally Posted by mandelbrot View Post
I queued that one up nicely for you, knew that's what you'd say, but I just wanted it explicitly said so that readers might realise that it's actually not the accountant's job to do all the compliance for their client.
Absolutely correct, it's the client's/landlords responsibility, and always is ultimately. But Poppie, despite having an accountant has never even heard of the PRTB, that's something else.
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