CGT Query

[ubiquitous]

If the OP fills out the CGT form incorrectly and pays an incorrect amount to the revenue do they not check it and then tell him he's made an underpayment and vice a versa if he made an overpayment.

The Revenue simply process the form as submitted. They have no way of verifying whether the capital gain is calculated correctly, until or unless they conduct an audit of the return.

Would he have to pay penalties if he made a genuine error?

If there has been an underpayment, yes. And interest also.

If there has been an overpayment, this can be reclaimed (usually with some difficulty) by the taxpayer. After 4 years the right to reclaim the amount overpaid is lost.

 

[ubiquitous]

really I dont think anyone can deny that the Irish tax authorities powers are vast (and they are not to be messed with)

From the current issue of Accountancy Ireland re the 2007 Finance Bill/Act
http://www.accountancyireland.ie/ds...Seeking_&_Search_Powers<br>By_Julie_Burke.htm

REVENUE POWERS – FINANCE BILL INTRODUCES NEW INFORMATION SEEKING & SEARCH POWERS

You may think that you are unlikely to ever come into contact with the Revenue Investigations and Prosecutions Division, but in the current climate this is no longer a remote possibility.

Two new draconian powers have been introduced in this year’s Finance Bill. The first being a new person specific search power which can compel employees and others to direct Revenue to key material. Failure to comply with the Revenue request carries a penalty of imprisonment and / or a fine. The second, will compel professional advisors and other third parties to provide information requested by Revenue unless “legally privileged” thus affording no protection to advice from accountants and tax advisors.

The new powers are modelled on those contained in criminal and other legislation. The scope of the new search power dramatically increases Revenue powers to equate with search powers used by Gardai in criminal cases where an offence is being investigated which is punishable by a term of imprisonment of five years or more. Yet, astoundingly, the new power has been introduced without a single appropriate safeguard in favour of the taxpayer or his advisor.

....

It is remarkable that this new power does not include a single safeguard for the taxpayer or his advisor save that a body search will be carried out by a person of the same sex. In particular, it fails to address the situation where a person may incriminate himself/herself if he or she is forced to provide information under this new power.

Revenue has indicated that the new search power is modelled on similar powers in criminal, company and competition act legislation. It is noteworthy that whilst the search powers given to Revenue are broader, there has been no introduction of equivalent safeguards

 

[Madangan]

here come the llamas ?

Not llamas(although they do seem cute) ,plamas(irish for "licking up to clubman as he is the boss "or you know brown nosing) and yes there should be a fada in plamas but my typing skills sadly dont go that far

 

[Bronte]

Ubiquitous why doesn't the revenue have to pay penalties and interest if you overpay tax - that's inequitable especially in cases where the revenue have made the error. I think I got interest on tax from the UK revenue on overpaid income tax years ago after much correspondance/cost to just get the tax back.

Also this 4 years limit on overpayments does it apply on underpayments - Can revenue go back say 20 years and say you incorrectly paid CGT in 1987 - even if the error was a minor amount with penalties and interest you would be bankrupt.

Personally I don't see how if you made a genuine mistake and the revenue didn't spot it that you should be penalised.

 

[ubiquitous]

Ubiquitous why doesn't the revenue have to pay penalties and interest if you overpay tax - that's inequitable especially in cases where the revenue have made the error. I think I got interest on tax from the UK revenue on overpaid income tax years ago after much correspondance/cost to just get the tax back.

Also this 4 years limit on overpayments does it apply on underpayments - Can revenue go back say 20 years and say you incorrectly paid CGT in 1987 - even if the error was a minor amount with penalties and interest you would be bankrupt.

Personally I don't see how if you made a genuine mistake and the revenue didn't spot it that you should be penalised.

if only...

 

[ClubMan]

Also this 4 years limit on overpayments does it apply on underpayments

No.

Can revenue go back say 20 years and say you incorrectly paid CGT in 1987 - even if the error was a minor amount with penalties and interest you would be bankrupt.

As far as I know they can unless there is some statute of limitations on outstanding tax liabilities which I don't think is the case. Some Oireachtas committee or other recently criticised the 4 year cut off point on tax reclaims by individuals and suggested making this longer or open ended.

 

[Nige]

No.

As far as I know they can unless there is some statute of limitations on outstanding tax liabilities which I don't think is the case. Some Oireachtas committee or other recently criticised the 4 year cut off point on tax reclaims by individuals and suggested making this longer or open ended.

Unless the Revenue have reason to believe that a return was prepared either fraudulently or neglegently, they cannot go back more than 10 years.

 

[ClubMan]

Didn't know that. Thanks. Is there some handy authoritative source of this info (e.g. Tax Briefing or TCA reference on Revenue website) for future reference?

 

[Nige]

It's section 924 TCA 1997.

 

[Bronte]

Well for sure it's unfair if the revenue can go back 10 years and we the taxpayers can only go back 4 - where is the logic in that.

Good news is I filled out CGT for myself in 2002, and sent them a large check which nearly killed me - so I only have to wait another 5 years to be in the clear. As far as I know I did it correctly but it was complicated - until I read this thread I had assumed that they checked it to see it was correct but apparently not. Still don't understand why they wouldn't check out the calculations.

 

[DrMoriarty]

Seems like a bit of a return to the good ol' days...

[broken link removed]

 

[ubiquitous]

Good news is I filled out CGT for myself in 2002, and sent them a large check which nearly killed me - so I only have to wait another 5 years to be in the clear. Still don't understand why they wouldn't check out the calculations.

They have no way of knowing whether the figures used in the underlying computation are correct and appropriate. Its quite easy to check the mathematical accuracy of calculations and perhaps they do this as a matter of course but I honestly don't see how someone sitting at a desk can give a definitive opinion as to whether it is appropriate in any particular case to claim retirement relief or indexation relief or deduction for acquisition costs on part-disposal etc. This really can only be ascertained by an indepth audit.

In my experience, the risk of overpayment is just as significant as the risk of underpayment.