Is Preliminary Tax due when tenant is withholding 20% tax?

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murphaph

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A friend here has a single property in Ireland rented out under RAS to a local authority.

The LA insisted on deducting 20% income tax as she's non-resident.

The LA deducts 20% each month from the gross payment to her. She has until now forwarded prelim tax for the property to Revenue for current tax year along with balancing payment for previous tax year.

Is it expected of her to continue forwarding 90% of expected tax bill in prelim tax even though the LA is actually deducting more than she'll pay in total taxes (after allowed expenses are factored in)?

If so, she'll effectively be seeking a refund for over payment every year from now on so long as the property is rented to the LA. Is that right? Seems a tad unfair to me if so.

I also noticed while completing a Form 11 for my mother that the PPS of the tenant is requested if the tenant has withheld 20% of the rent. What happens in my friend's case though? Her tenant is not actually withholding the 20%, the local authority is and the LA won't have a PPS, or will they for such a purpose? She can't enter her tenant's PPS as they haven't been withholding anything for Revenue.
 
Murphyh you certainly have plenty of queries.
Your friend has not appointed an Irish agent to receive the rent so the person paying the rent is obliged to withhold 20% of the payment. They should issue a certificate of tax withheld and there will be a reference number on it.
The liability for a year is after tax withheld so if they have no liability after tax withheld then the prelim is zero.
 
Cheers Joe, yeah it's that time of year for the old tax queries isn't it! Appreciate the help immensely by the way. I'd be lost without it!

She used to have an agent so she tells me but the local authority where her property is located would not accept the use of an agent and insisted on withholding the 20% regardless.
 
Does the LA forward the 20% to revenue every month? If they put it into their bank accounts they probably should pay her interest on it as she does not have the use of the money.
 
murphaph said:
She used to have an agent so she tells me but the local authority where her property is located would not accept the use of an agent and insisted on withholding the 20% regardless.
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She should tell them to get lost. Once a Collection Agent is appointed and properly registered with Revenue, they have no legal basis for withholding 20% of the rent.
 
That's what I said. To be honest this whole 20% business is a joke. In the UK the LL can opt to receive the entire rent himself so long as his tax affairs are in order and he has a TCC.

@Bronte: I'm not sure if they forward to Revenue each month. I'm not even sure if she knows that, but I'll ask when I see her.
 
I don't know really. I have an RAS contract as a non-resident as well (with agent however as the LA had no issue with that so long as I could supply the agent's PPS number). I imagine they deduct the 20% from the gross and pay a lump sum to Revenue at the end of the year, then furnish the LL with an R185 (at least that's what they're supposed to do). My payment from Fingal is made through some electronic payment system called "Agresso". i presume this system can handle all these things and more or less fully automate them once a new payee is entered into it.
 
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