How to solve problem with underpaid tax due to foreign savings interest

[billb]

I don't think my situation has been covered specifically before so I would appreciate any advice that AAMers can give. I moved to Ireland with my family in 2008 and due to total ignorance of the Irish tax system we have not paid enough tax and would appreciate any advice how best to handle the situation before we call the revenue commissioners.

Brief summary is

• I am a PAYE worker and my wife does not have a job but has her own interest income from our life savings
• We submitted a form 12A in April 2008 on which we declared my wife's Uk savings interest of 10k per year as "other income"
• We were not sent any tax returns to complete until this year when we got a form 12 to cover 2011 which we are completing
• As our UK interest has dropped significantly our first thought was that we must be due for a tax refund for previous years and were wondering how to claim it.
• From our tax statements now we can't see any tax shown relating to the UK interest so it appears that the amount we declared on our form 12A was not used in any calculations

Looking through other posts now then I guess we should have been declaring the interest income each year using PAYE Anytime but didn't do this and so I presume we bear some of the fault but I am surprised that the revenue did not send us returns each year as they used to do when we were in the UK.

We have no problem in paying any tax that we owe but are concerned that we could be liable for penalties, surcharges and interest ?
Whilst we might be negligent I think the fact that we declared our income on the form 12A shows that we were not trying to hide our income or get away without paying our dues.

So should we:-
1. Call the Revenue, explain the issue and hope they treat us sympathetically
2. Send in our form 12 for 2011 and wait for the Revenue to tell us of the mistake for those other years
3. Other suggestions?

 

[Gervan]

I think the first thing, before calling to Revenue, is to work out approximate figures.
Were you in 2008 given your full Paye allowance and your wife's personal allowance, for a start? Check you have been claiming all your tax credits for the years since.

You can download Form 11 and off-line software from the Revenue site, and work through offline to give yourself some idea of what, if any, underpayment there is. If you have been paying UK tax on your wife's deposit income I cannot see there being much of a liability. You can set the UK dirt against Irish liability.

The Form 12 does not have to be submitted for months yet, so no panic.

 

[billb]

Were you in 2008 given your full Paye allowance and your wife's personal allowance, for a start? Check you have been claiming all your tax credits for the years since.

Thanks for the advice Gervan - the tax credits given in 2008 when the interest income was greatest were:-
Married Couple (one income) €44,400; Married persons €3660; PAYE €1830; Home Carers €900

Do you think that instead we should have got Married Couple (dual income) tax credits ?

You can download Form 11 and off-line software from the Revenue site, and work through offline to give yourself some idea of what, if any, underpayment there is. If you have been paying UK tax on your wife's deposit income I cannot see there being much of a liability. You can set the UK dirt against Irish liability.

Should I use Form11 or Form12 ? Also I couldn't find any software to download, do you know where about it is on the revenue site

 

[mandelbrot]

It's the ROS (Revenue Online Service) Offline Application, and it can be downloaded here:
http://www.ros.ie/PublisherServlet/info/install

In any year that the interest income exceeds €3,174 you will be deemed a Chargeable Person ([broken link removed]) and required to file a Form 11.

This could get a little bit messy, so you might be as well off to go and get a decent tax advisor to sort out the historic issue (to minimise exposure to surcharge, interest & penalties), and it'll be straightforward to do it yourself going forward.

 

[billb]

This could get a little bit messy, so you might be as well off to go and get a decent tax advisor to sort out the historic

Thanks for the clarification, its very much appreciated. I think I'll take your advice and try and find a tax advisor in around Cork City (hopefully not too expensive)