How can/could Revenue "find out"?

NoRegretsCoyote said:
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.
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We don't know what his situation is but the mere fact that he has 500k in spare funds doesn't mean that he's rich by any meaningful standard. And however much wealth he has , he can hardly bring it with him when he passes away, so it's quite reasonable to prudent to gift or bequeath it to a relative. Had he gotten seriously sick or incapacitated in his retirement, that money could well have been needed to finance nursing care. The happy accident that he didn't means now that he's comfortable, but he's not rich.
 
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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?

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.
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I doubt the so called rich uncle gained his fortune via PAYE, so your assertion re:50% tax is just that, - an assertion. However that is his business and more luck to him.

She should do what you are meant to do, pay the tax due and move on. It was a windfall , she is very lucky, and hence do the right thing.
 
fidelcastro said:
I doubt the so called rich uncle gained his fortune via PAYE, so your assertion re:50% tax is just that, - an assertion.
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It's not an assertion, it's a presumption. According to the now seemingly forgotten, but never retracted, Taxpayers Charter, all taxpayers are entitled to a presumption of honesty from Revenue. Surely they are entitled to no less from us here on askaboutmoney?

fidelcastro said:
However that is his business and more luck to him.
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Indeed.

fidelcastro said:
She should do what you are meant to do, pay the tax due and move on. It was a windfall , she is very lucky, and hence do the right thing.
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The "right thing" eh? There's all sorts of "right", there's legally right, morally right, efficiently right and expediently right. When it comes to taxes, these versions of "right" can be quite different from each other.
 
OP's sister needs to get herself along to a tax consultant as a matter of urgency for professional advice on how to put her tax affairs in order.
There is much that we do not know about in relation to the particulars of the specific case.
It occurs to me that it may yet be possible to rescue the situation legally, especially if the benefit has only accrued recently.
Whatever OP's sister does she must not ignore the situation as this will definitely not go away of it's own accord.
 
It doesn't matter whether we think the Uncle, the niece or anyone else in this chain is rich or not. It's irrelevant.

The issue here is that
  • does the recepient have a potential tax liability? (and the answer to that is probably yes),
  • will Revenue find out? (again, potentially and probably yes)
  • and will she make the situation worse by ignoring the issue? (again, probably yes)
 
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DirectDevil said:
Whatever OP's sister does she must not ignore the situation as this will definitely not go away of it's own accord.
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Agreed. Consider the stress that people with mica or pyrite issues hanging over them have to deal with. It could become very stressful worrying about revenue coming knocking on the door. This gift horse should not become a curse for the OP's sister. She should get things in order.
 
Baby boomer said:
It's not an assertion, it's a presumption. According to the now seemingly forgotten, but never retracted, Taxpayers Charter, all taxpayers are entitled to a presumption of honesty from Revenue. Surely they are entitled to no less from us here on askaboutmoney?


Indeed.


The "right thing" eh? There's all sorts of "right", there's legally right, morally right, efficiently right and expediently right. When it comes to taxes, these versions of "right" can be quite different from each other.
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In order to avoid costing herself more than the tax she is due to pay in additional interest and penalties; the right thing to do is to pay whatever tax she is legally required to pay. Discussions around the morality of a tax and how do tax authorities know what they know is all well and good, until a Revenue intervention.
 
Wład_Szćżepąnjk said:
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?"
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To get back on topic. The gift is subject to the Group C threshold of €16,250 with the balance taxable at 33%. That's a very big liability.

There may be a way to structure a part of this as a loan. Say €90,000 over 30 years with interest at prevailing deposit rates (0%) which is a repayment of €3,000 annually. The uncle can write off this €3,000 repayment annually as a gift and this has no implications for use of lifelong CAT thresholds.

If the "gift" was relatively recent she should take immediate steps to regularise its status and to (legally) reduce her tax liability. She should seek professional tax and legal advice. Speculating about if/when she is going to get caught is beside the point. It's something that no should want hanging over their heads.
 
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Interesting discussion about criminal fraud. There seems to be a lot of sympathy for the fraudster.
I doubt there would be similar sympathy for a social welfare con artist, who defrauded the state of 150k.
In fact, I could post dozens of court reports of such individuals being jailed for 2 or 3 years and shamed in the national press.

People may think the tax is unfair, but its the law. This is clearly criminal behaviour and should be called out as such.
 
Wład_Szćżepąnjk said:
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.
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€159,637 but sure it's only the state, LoL.

Wład_Szćżepąnjk said:
Her response was "shure what about it, how'd the tax man ever find out?"
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A line once uttered by everyone on this list, I'm sure

List of defaulters

Index of defaulter listings for a given year
www.revenue.ie www.revenue.ie
 
Wład_Szćżepąnjk said:
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?"
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At the end of the day your sister is an adult. You could certainly mention to her that if situation is not sorted, she could end up with a hefty tax bill accruing interest and penalties.
At the end of the day, even after sorting tax she walks away with over 300k. Not to be sniffed at.
its really not your business and as you dont have details, its possible the situation is not as bad as first appeared.. your uncle may have gifted her 3k each year over a number of years, that you are not aware of.
Your sister has landed on her feet and the only one thats pulling the rug from under her feet is herself.
 
Here's a how did they found out that happened to me.
Sold shares sitting in US money landed in my IE account. Not huge amount maybe circa 10k.
End of year got a letter from revenue asking to fill out the form re additional earnings.
Based on cross checking with colleagues we believe what happened was they cross checked the incoming bank account against accounts also recv mortgage interest relief to identify us.

At least that was the only logical explanation we had based on those who were contacted.
Irish account recipients without mortgage relief, and those the transferred to offshore escaped the net.
 
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