Non-Resident Landlord - Management Agency refuses to collect Tax

Ham Slicer,

Before you go, could I ask you to give your opinion on my own case, which is different to Casiopea's with regard to how I receive the rent.

Every month, the tenant pays the gross rent to my management company, an estate agent. The estate agent duducts their fee plus any expenses incurred directly by them during that month (e.g. boiler service), and deposits the difference in my Irish bank account.

Annually, to calculate my profit, I sum the bank deposits, and deduct any expenses incurred directly by me during the year (e.g. house insurance). This rent profit is declared in my tax returns, I receive a Notice of Assessment, and I pay the tax due.

Is the notion of a Collection Agent relevant in my case?
Am I breaking any tax law?

James
 
Thanks HamSlicer,

Sorry for the confusion but I realize I dont need the tax collector.

What Im not sure about is whether the obligation is on the landlord, not to receive the gross rent, ie whether it should have been going to the management company or withheld by the tenant.

Again there is no mention of obligation on landlords maybe the onus is on the agent but I did not follow this procedure (my agent is in ireland):

Where an agent, resident in the State, is appointed by the non-resident landlord to manage the property and the agent is collecting the rents, the rents must be paid gross to the agent. The agent is then chargeable to tax on the rents as Collection Agent for the landlord and is required to submit an annual tax return and account for the tax due under Self Assessment. Leaflet IT10 Guide to Self Assessment* provides more detailed information.

And as far as Im aware no R185 form has been submitted.

Hi James,
In answer to your question my account does all the calculations and then I submit returns via form 11, my notice of assesment comes to my swiss address (yes they have that) and then after paying the tax due I received a receipt from the revenue commissioners to my swiss address.

I cannot see why Revenue would ever prosecute you, or impose interest or penalties, since you do declare the rental income and they accept that by confirming it in the Notice of Assessment, and then they receive your payment of tax by the due date.

Agreed. I think at worse some of my paperwork is wrong.
 
ubiquitous said:
casiopea,
Yes you are breaking the law and you will need to take steps to address the problem.

See [broken link removed]

OK, Ive followed this up with the management company, the accountant and the revenue commissioners.

All 3 say Im not breaking the law.

The revenue commissioners are at best a bit vague about their own requirements in short they said:

"The obligation to deduct tax rests with the tenant or letting agent not the landlord so there is no penalty that could be levied on you. Given the fact that you have been returning the Rent for income tax purposes it would be very unlikely that Revenue would go after the tennant or letting agent as Revenue are not at a loss. "

I asked was I breaking the law to continue submitting taxes as I have done in 2004 and 2005, he said no. I asked for that in writing (as sometimes mistakes are made over the phone), which they'll send me once I have requested it in writing.

cas.
 
Casiopea,

Good work!

This 'unofficial' ruling also appears to cover my situation, so there is no need for me to appoint a Collection Agent either. That is a big relief for me.

Thanks for making the enquiry.

James
 
JamesUK said:
This 'unofficial' ruling also appears to cover my situation, so there is no need for me to appoint a Collection Agent either. That is a big relief for me.
James
James

I dont agree with your conculsion you must, as a non resident, appoint an Irish collection agent. Fail to do so and Revenue will instruct your tenant to withhold standard rate income tax on your rents i.e. pay you 80% and 20% over to the. I refer you back to my post on 15/5/06
 
Bazermc,

I don't understand the basis on which you disagree.

Considering my case (different to Casiopea's), I quote from IT70 - 'A Revenue Guide to Rental Income':

"Where an agent, resident in the State, is appointed by the non-resident landlord to manage the property and the agent is collecting the rents, the rents must be paid gross to the agent. The agent is then chargeable to tax on the rents as Collection Agent for the landlord and is required to submit an annual tax return and account for the tax due under Self Assessment."

Doesn't this state my agent's responsibility, not mine? By definition, my management company (an estate agent) is the Collection Agent, because it was "appointed by the non-resident landlord to manage the property and the agent is collecting the rents." But they refuse to entertain this responsibility - the main point of this thread.

To date, we've had the opinion of Ubiquitous, Ham Slicer, Max Hopper, and yourself. I cannot be sure, but Casiopea and I appear to be the only non-resident landlords here.

Ubiquitous explicitly states that Casiopea is breaking the law, but he only stresses that I need to take some action.

Ham Slicer makes the point that (at least in Casiopea's case) the landlord is not breaking any law.

Bazermc, you don't explicitly state that I'm breaking the law, but stress that if I fail to appoint a Collection Agent (which role I believe should be served by my estate agent, by Revenue's definition), then "Revenue will instruct your tenant to withhold standard rate income tax on your rents".

If Revenue do take action like this, and I presume they are entitled to, then that should be OK. It will only affect me in an administrative way, as would be the case if my estate agent fulfilled their obligation as Collection Agent. I will still declare the rental income in my tax returns, but won't have to make the payments to revenue. I will receive a Form R185 from the tenant, to show that the tax has been accounted for to Revenue. I will then need to make a claim for expenses incurred.

I don’t wish to ask any family member or friend to undertake the responsibility and chore of collecting the tax and submitting a yearly return. So I would prefer the extra administrative duties involved.

(Such action by Revenue doesn't square with the tenant letting agreement, itself a legal document, which obliges the tenant to pay the gross rent to the estate agent. How to resolve this, I don't know!)

Bazermc, you didn't comment on what Casiopea said Revenue told him by phone. Perhaps, you would prefer to see Revenue opinions in writing (and I don't know if Casiopea will request that). But the implication of what Revenue said is that neither Casiopea nor I are breaking any law, and that Revenue is pleased we are paying the taxes due.

James
 
This debate is being over-analysed to death.

The basic point is this: The law states that 20% tax must be deducted at source by the tenant. The Ombudsman's report has pretty much made it impossible for Revenue to enforce this responsibility onto tenants. The Revenue's substitute approach (which does not appear to be based on legislation) is now to insist that each non-resident landlord appoints a Collection Agent.

Anyone with experience of dealing with Revenue will know that they generally take a jaundiced view of cases where their edicts are ignored (even where there damn all direct legislative basis for same and/or where there is no loss of revenue to the exchequer). In the long run, it is safer and simpler to observe the law than to try to find technical excuses to ignore it.

If you try to beat the system, the system will beat you in the end.
 
ubiquitous said:
Revenue's approach is now to insist that each non-resident landlord appoints a Collection Agent.

Not according to the Revenue representative I spoke to last week and not according to my accountant.

Ive followed this up as you recommended and while the Ombudsman's report has pretty much made it impossible for Revenue to enforce this responsibility onto tenants the obligation does not lie on the landlord either.

JamesUK, have you sat down with your accountant about this? Our situations are slightly different and you should seek professional advice about this.

This debate is being over-analysed to death.

On this I wholeheartedly agree, at the end of the day this law seems to be a very gray area for the revenue themselves and therefore I dont see how we (AAM) can come to a satisfactory solution/conclusion. I think the Revenue have to take responsibility when it is not clear to law abiding citizens how to implement their requirements.
 
casiopea said:
I think the Revenue have to take responsibility when it is not clear to law abiding citizens how to implement their requirements.

Problem is, they never do...
 
I'm reviving this old thread as it's the most appropriate one I've found.

I have been submitting returns on Form 11 to revenue and have not hidden my non-resident status from them. They wrote to me to advise that I must either have the tenant deduct the 20% or nominate an agent.

I opted for the latter as I have a trusted family member who is prepared to take this on. Revenue sent them a PPS for this purpose.

Now, my question is this:
Who completes the tax return for the rental income, me or my family member? Do they complete a Form 11 just as if it was my tax return, the only difference being the PPS number and name/signature? Surely it must be similar to this as their own tax affairs should not have anything to do with my rental income?

I've asked Revenue and await a response, but your thoughts are most welcome here.
 
I would not rely on any advice you get from Revenue. You need independent advice.
I relied on advice they gave me, was subsequently audited for a matter related to what I asked advice on. Audit levied a higher rate of stamp duty (9%) than I was advised (3%) and I had to pay the balance plus interest and penalty. Needless to say I was not happy! I keep saying I should appeal, but am reluctant to do so, lest they mark me for a future audit.
 
I'm reviving this old thread as it's the most appropriate one I've found.

I have been submitting returns on Form 11 to revenue and have not hidden my non-resident status from them. They wrote to me to advise that I must either have the tenant deduct the 20% or nominate an agent.

I opted for the latter as I have a trusted family member who is prepared to take this on. Revenue sent them a PPS for this purpose.

Now, my question is this:
Who completes the tax return for the rental income, me or my family member? Do they complete a Form 11 just as if it was my tax return, the only difference being the PPS number and name/signature? Surely it must be similar to this as their own tax affairs should not have anything to do with my rental income?

I've asked Revenue and await a response, but your thoughts are most welcome here.

Its very simple.

1. Revenue keep the collection agent details on record.
2. You file your annual Form 11 using your own name and your collection agent PPSN.
3. You pay your tax liability.
4. If you don't do (2) or (3), Revenue will chase the collection agent as per details on record for them.

Like the others above, I would be very wary of "advice" from Revenue.
 
Cheers for all the advice folks. Duly noted.

To be fair to Revenue this time...they responded with the same advice as above. I complete the form, but use the agent's number.
 
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