Forced landlord, not doing what I should be

[cremeegg]

Cremeegg are you speaking from personal experience with revenue or your own interpretation of the rules?

The rules quite clearly require that you have invoices for every item, (the precise requirements for an invoice to be acceptable are very detailed, many shop receipts and certainly credit card slips, would not qualify).

The rules also require that you keep documents for 6 years. Which is less time than a capital allowance runs.

It is a self assessment system so that your own interpretation of the rules is all there is until such time as you have a Revenue audit.

I have a number of items in a rental property where I am claiming allowances based on an estimated value when they were first rented. I had photographs of the items in the file, to prove that they actually existed. And ads from done deal to support the value I was using for the second hand sofas etc.

When I had a Revenue audit, this was not raised as an issue.

 

[jim]

The rules quite clearly require that you have invoices for every item, (the precise requirements for an invoice to be acceptable are very detailed, many shop receipts and certainly credit card slips, would not qualify).

The rules aren't clear at all. Yes, receipts/supporting docs are required to be kept for 6 years. However, there is no clear guidance on the revenue website or elsewhere specific to cap allowances and the requirement to hold onto receipts for all purchases of same. Unless you can point me to where it is.

When I had a Revenue audit, this was not raised as an issue.

It seems to be ok to just use an estimate and nothing will become of it. so its open season.

 

[torblednam]

The rules aren't clear at all. Yes, receipts/supporting docs are required to be kept for 6 years. However, there is no clear guidance on the revenue website or elsewhere specific to cap allowances and the requirement to hold onto receipts for all purchases of same. Unless you can point me to where it is.

The "rules" aren't unclear at all. Tax rules are called legislation, and the legislation requires that such records be kept as will enable a person to make a true return. (Section 886 of the Taxes Consolidation Act 1997.) What may be sufficient in one taxpayer's case may not be in another's, due to the relative complexity / simplicity of each person's business or affairs.

In the case of a reluctant LL, nobody could reasonably expect that they would have known of the need to retain all the reciepts for their furniture and white goods, in case they later became a LL, so it is entirely reasonable that they would have to estimate the value of these items for wear & tear purposes. If the value isn't off the wall, there'll be no issues if Revenue come looking.

If you're a long term and/or multi-property professional LL, you should have the receipts to evidence your claims.

It seems to be ok to just use an estimate and nothing will become of it. so its open season.

Hardly. I think you need to get some perspective. If you overstate the value of the stuff in a property by €5k, you'll be claiming an additional €625 in wear & tear annually, and saving a whopping €300 or so on your tax bill. That has to be the outward limit of what you would be likely to get away with, and beyond it in some cases.

 

[cremeegg]

The rules aren't clear at all. Yes, receipts/supporting docs are required to be kept for 6 years. However, there is no clear guidance on the revenue website or elsewhere specific to cap allowances and the requirement to hold onto receipts for all purchases of same. Unless you can point me to where it is.



It seems to be ok to just use an estimate and nothing will become of it. so its open season.

The legislation is here

http://www.irishstatutebook.ie/eli/1997/act/39/section/885/enacted/en/html

Its self-assessment. You must interpret it as you see fit.

I certainly would not agree that it is "open season"

 

[jim]

Im sorry torblednam and cremegg but the rules/laws/legislation whatever you want to call it torbledman is not clear to me. There is nowhere where it definitively states that for cap allowance claims one does or doesn't need to have receipts. If it is clear where is it?

Cremeegg nowhere in that link does it talk about cap allowances and the requirement to have or not to have receipts.

I do take your point that ultimetaly its pob down to interpretation and so I reiterate my point the legislation/law/rules/guidance is not clear.

 

[Bronte]

Thank you Mandelbrot for confirming reasonableness, I ended up a non resident landward unexpectedly and do not have all receipts if I remember correctly. Revenue people are realistic and reasonable in my experience.

Creame egg, I'd be very interested in your audit, in fact I'd like one in many respects, so I'd know for sure I was doing everything correctly.

 

[Gordon Gekko]

In an ideal world, one has a receipt for everything.

And the legislation is quite clear; it’s 6 years from when one needs the receipt which could be 14 years in the case of a capital allowances claim.

However, Revenue are reasonable; like many, I am an accidental landlord. I had furniture and appliances which went from being my own personal stuff to being capital items in the rental property. I did not have recipts for any of the items. I estimated their market value at that time and claim capital allowances. That is a reasonable approach and one that no Revenue auditor would push back against in my view.

 

[Bronte]

The "rules" aren't unclear at all. Tax rules are called legislation, and the legislation requires that such records be kept as will enable a person to make a true return. (Section 886 of the Taxes Consolidation Act 1997.) What may be sufficient in one taxpayer's case may not be in another's, due to the relative complexity / simplicity of each person's business or affairs.

In the case of a reluctant LL, nobody could reasonably expect that they would have known of the need to retain all the reciepts for their furniture and white goods, in case they later became a LL, so it is entirely reasonable that they would have to estimate the value of these items for wear & tear purposes. If the value isn't off the wall, there'll be no issues if Revenue come looking.

If you're a long term and/or multi-property professional LL, you should have the receipts to evidence your claims.



Hardly. I think you need to get some perspective. If you overstate the value of the stuff in a property by €5k, you'll be claiming an additional €625 in wear & tear annually, and saving a whopping €300 or so on your tax bill. That has to be the outward limit of what you would be likely to get away with, and beyond it in some cases.

Funny M, wow, 300 hundred saving on an overvalue by 5 k. I'll put the settee set in as leather worth 10k!!.

Which reminds me, my 20 year IKEA settee at home needs replacing.

 

[jim]

But yet still there is zero clarity whatsoever from the revenue on whtehr or not receipts are required for cap allowance claims. They either are or are not. Which is it and where is the revenue guidance on it? There is none. Apart from the general 6 yr rule re keeping receipts.

It seems you can make cap allow claims with not a receipt in sight. Yet the revenue says keep receiots for 6 yrs in case we audit you. What should people do then? There is no clarity on this point. There is interpretation and use of reasonable logic but that is all.

 

[torblednam]

But yet still there is zero clarity whatsoever from the revenue on whtehr or not receipts are required for cap allowance claims. They either are or are not. Which is it and where is the revenue guidance on it? There is none. Apart from the general 6 yr rule re keeping receipts.

It seems you can make cap allow claims with not a receipt in sight. Yet the revenue says keep receiots for 6 yrs in case we audit you. What should people do then? There is no clarity on this point. There is interpretation and use of reasonable logic but that is all.

The 6 year rule is in the same section of the Act, section 886. It requires that you keep your records - such as YOU believe are sufficient to enable YOU to make a true return under SELF ASSESSMENT - for 6 years.

You won't get absolutes in an area like this, which you should recognise is a good thing as it allows scope for reasonableness, rather than have a black & white rule that doesn't.

 

[jim]

torblednam i think you linked the wrong section of the act.

Nowhere in sec 886 does it reference what you have spelled out above aoart from the 6 yr rule which is not what i am disputing. You are right when you say "it requires you to keep receiots" but thats it. There is nowhere where it says "such as you see as sufficient".

I agree with you that there is prob no absolutes in an area like this....which is why im saying its a tad ambiguous.

 

[torblednam]

torblednam i think you linked the wrong section of the act.

Nowhere in sec 886 does it reference what you have spelled out above aoart from the 6 yr rule which is not what i am disputing. You are right when you say "it requires you to keep receiots" but thats it. There is nowhere where it says "such as you see as sufficient".

I agree with you that there is prob no absolutes in an area like this....which is why im saying its a tad ambiguous.

It says:

"shall keep, or cause to be kept on that person's behalf, such records as will enable true returns to be made for the purposes of income tax, corporation tax and capital gains tax of such profits or gains or chargeable gains."

It's not for Revenue to tell you what is or is not sufficient to enable you to make a true return. It depends on the facts of your own case, and the onus is on you to comply with the law. Revenue, if they examine your return and such records as you've based it on, might agree with you or not.

If you have receipts for every penny, that's great, if you have only some receipts but what you've claimed is reasonable on the face of it, that'll almost certainly be fine too.