Hi - I am wondering if anyone has come across this situation with a client: a young (20's) company Director filed his 2022 Form11 back in January of 2023, to get it in early. At that time, the form did not have the option to claim a Rent Credit. All his 2022 income was just PAYE salary, with 20k of taxes / PRSI / USC deducted at source. To claim the small rent credit, he filed an amended Form11 in November 2023. In Q1 of 2024 his rent credit was finally processed, BUT he then got hit with a revised assessment, where Section 997A was applied by Revenue, and his tax credits and standard rate band were wiped away. So instead of receiving back the €500 Rent Credit, he got hit with a tax bill of €20k !!
This was queried with Revenue, and they said it was because of the warehoused debt. It was explained to Revenue that, 1/3rd of the taxpayer's debt amount was part of the Covid warehouse debt (Jan to April 2022) and the balance had already been paid over to the CG in monthly P30 returns and payments. So to impose a €20k balance due on the Director was effectively seeking to collect the same money twice, and to collect it from after-tax income.
This explanation to them had no effect, and after waiting 2 months for a response, they replied to say that until the PPA was in place for the warehoused (which it now is) the debt would remain with the taxpayer.
I realise that this s997A is aimed at companies / individuals that are considered unlikely or doubtful to pay their debts. But in this case, to impose the section on a young Director, effectively requiring him to discharge the debt out of his after-tax income, is grossly unfair, in my view. I would also regard this as a very dangerous precedent, whereby this action by Revenue would discourage many taxpayers from amedning a tax return (whether the amendment is in their favour or not), in case they get hit with an unexpected liability.
Any thoughts? Has anyone experienced something similar with a client?
