How can/could Revenue "find out"?

W

Wład_Szćżepąnjk

New Member
Messages
3
I met up with some family members over the Easter break, and congratulated my sister (44) on finally buying a house... and what a house.

She rarely drinks, but had one glass of prosecco too many. It turns out our uncle gifted her €500,000, and she put that with her savings and bought the house. No mortgage. Alas, it's completely unfurnished.
Anyway, I'm not surprised (or jealous). She's always been his favourite, he's wealthy and has no family of his own. Like my other sister said, she was going to inherit everything from him anyway; now she's just getting half of it early.

I discovered later that she had also let slip she paid no gift tax on the €500k. My other sis pointed out to her that she's liable for about €150,000 tax. Her response was "shure what about it, how'd the tax man ever find out?"

It's a fair point she makes. We all love her to bits, we're not jealous types... we're not going to report her. Had she not had just one (and we're talking just one) too many, none of would be none the wiser. I've never seen her tipsy like this before, I can't imagine it happening again, and I can't imagine her letting it slip to someone that would squeal on her.

However, I'm concerned that if the taxman did find out, she's get a whopping bill, but hasn't a penny to her name apart from a house worth a shade over half a mil.
Should I be concerned for her? Or is it right when she says, "how'd the tax man ever find out?"
 
On my first reading, I wondered about the AML declaration that the Solicitor doing the conveyancing would have looked for; but I guess a letter from Uncle would have covered that. In which case there is a legally relied upon document confirming that this is a gift.

There's a part of me that feels this comes under the heading of an SEP - Someone Else's Problem.

From your sister's point of view however, the question isn't so much - how would Revenue find out, but when will Revenue find out? and it won't just be €150k but interest on top of that for however long she has evaded the tax.

She has a significant asset that she can sell to pay it when that day comes; but it would be cheaper to re-mortgage now for 150k and pay the tax.
 
Peanuts20 said:
It's possible the bank in question (to where funds were lodged) may report it under AML requirements
Click to expand...
Yes but suspicious transactions from an AML perspective go to AGS, not Revenue.

I am speculating here, but a transfer of said amount from one Irish bank account to another might not even raise flags, especially if donor and recipient have the same surname. The main line of defence from an AML perspective would be your sister's solicitor who is obliged to seek assurances that the source of funds is legal, as @Thirsty has outlined.

Sister's solicitor would have (presumably) advised her that there would be CAT implications but to my knowledge that would be the end of it from the solicitor's perspective.
 
If the sister is queried about this could not simply say that the money is a loan from the uncle?

There is meant to be interest charged but it’s linked to rates banks are offering for deposits - so around 0% would be correct.
 
Dunelm said:
If the sister is queried about this could not simply say that the money is a loan from the uncle?
Click to expand...
The question is what AML documentation was already lodged with Solicitor and if a loan agreement is in place.

In any event from the OPs side, I'm slowing reverting back to an SEP point of view.
 
NoRegretsCoyote said:
A loan with no repayment schedule is not a loan!
Click to expand...

I’ve see one where the repayment date is listed as 30 days after requested in writing by the lender.
No idea if it should have been allowed but drawn up by a legal firm so presumably they thought it was acceptable.
 
NoRegretsCoyote said:
Yes but suspicious transactions from an AML perspective go to AGS, not Revenue.

I am speculating here, but a transfer of said amount from one Irish bank account to another might not even raise flags, especially if donor and recipient have the same surname. The main line of defence from an AML perspective would be your sister's solicitor who is obliged to seek assurances that the source of funds is legal, as @Thirsty has outlined.

Sister's solicitor would have (presumably) advised her that there would be CAT implications but to my knowledge that would be the end of it from the solicitor's perspective.
Click to expand...

It goes to both.

 
On a house transfer, the transaction is recorded on a Revenue PD (Particulars Delivered) form. Whilst the source of funds to acquire the house is not notified to Revenue, the purchase transaction is, as is the fact that she owns the property.

So, with that and the Local Property Tax return which she may have lodged, the fact that she purchased a house is on the Revenue systems. Any AML reporting done will also have her on their systems.

If she was ever audited, Revenue could query the source of the funds to purchase the house. They have wide powers to look into bank accounts etc.

If Revenue enforcement ever had cause to pursue her for any reason (eg by failing to file any tax return), Revenue have search capabilities to establish the ownership of properties and any charges on the properties eg a land registry search. A mortgage free house of such value for a person of (presumably) modest means might raise curious eyebrows in officialdom.

If she is not careful, and does not keep her affairs in order, a small trip-up on her part could cause the Revenue authorities to start digging. And they wouldn’t have to dig too far.
 
Last edited:
the long and short of it is that revenue will absolutely discover this either in the near future or when your uncle passes away and his assets subsequently distributed. A transfer of €500,000 from one person to another will attract the attention of Revenue and come up on their radar. This would go into a file to be investigated and I believe the person needs to declare this by a date later in the year. So Revenue won't come looking today or tomorrow, but once the date passes then they can and will come and as previous poster said, they will apply penalties and interest etc which are very severe. Pay the tax man and don't be looking over your shoulder and fearing the knock at the door.
 
I'd imagine a good revenue officer would have a gander through pages like this every now and again. They'd be awful fools not to. One good thing she has going for her, is the other half a million she's "maybe" going to collect when the uncle passes away. That might just about pay the taxes she'll be hit with, she might need a few bob more along with it though. What a mess it would be, if God forbid, she passed away first.:)
 
Last edited:
This thread serves to underline just why CAT is a horribly unfair tax. The uncle, we must presume, has acquired his fortune lawfully and has paid - if he's living in Ireland - stunningly high taxes on it already. He is now in the unfortunate position that, having already suffered marginal tax rates in excess of 50%, Revenue will get a further 33% bite out of almost everything he leaves behind him. Why shouldn't he be allowed to bequeath his own after-tax property to a favourite niece?

And CAT of course, is a tax for the little people. The truly rich will employ effective tax avoidance strategies to - quite lawfully - reduce or eliminate their beneficiaries' liability. It is regular folk who are fortunate enough to inherit modest sums or properties who get clobbered.
 
Baby boomer said:
This thread serves to underline just why CAT is a horribly unfair tax. The uncle, we must presume, has acquired his fortune lawfully and has paid - if he's living in Ireland - stunningly high taxes on it already. He is now in the unfortunate position that, having already suffered marginal tax rates in excess of 50%, Revenue will get a further 33% bite out of almost everything he leaves behind him. Why shouldn't he be allowed to bequeath his own after-tax property to a favourite niece?
Click to expand...
If you inherit €335,000 from a parent, you pay nothing in CAT. If you inherit from an aunt or uncle, you pay €100,000. If you inherit from your aunt or uncle's surviving spouse, you pay €105,000. This is perhaps the greatest and most shameful inequality in the Irish tax code.

And a special CAT exemption for a favourite niece or nephew would worsen this inequality, ultimately creating a "winner takes all" mess and untold strife and jealousy in families.
NoRegretsCoyote said:
Sorry, if you have half a million euros in spare cash to gift to a relative well you are indeed "rich".
Click to expand...
No, having on retirement the price of a middling family home in a reasonably popular urban area is counted as "rich" only in a country that despises and begrudges the accumulation of even modest wealth.
 
Baby boomer said:
No, you are comfortable.
Click to expand...
70% of households don't even have €500k in net wealth, never mind having as much to give away. The median household has €50k in liquid financial assets (see table 3.4). Someone able to give away half a million euros in cash is rich, or else you have a useless definition of the word.

You compare yourself to your peers in life, but your peers are not randomly selected. People completely forget that the population of AAM is self selected and (on average) we have much higher income and wealth than most.
 
NoRegretsCoyote said:
70% of households don't even have €500k in net wealth, never mind having as much to give away. The median household has €50k in liquid financial assets (see table 3.4). Someone able to give away half a million euros in cash is rich, or else you have a useless definition of the word.

You compare yourself to your peers in life, but your peers are not randomly selected. People completely forget that the population of AAM is self selected and (on average) we have much higher income and wealth than most.
Click to expand...
This has nothing to do with self-selection, the fact remains that Ireland has relatively few rich people. And that's a major long-term problem for our country and economy.

To repeat, having the price of a middling Dublin house in net wealth isn't rich.
 
T McGibney said:
To repeat, having the price of a middling Dublin house in net wealth isn't rich.
Click to expand...
I agree, and that's about the extent of my own net wealth. But that's not the case here.

We are talking about a situation where someone is giving away the value of a middling Dublin house in cash.

The uncle presumably has a place to live and an income for himself still.
 
You must log in or register to reply here.
Back
Top