Obligations of disclosure of accountant if there is tax evasion

B

Bronte

Registered User
Messages
15,208
If one discovers that they have been underpaying tax (and this relates to the new revenue fishing exercie on pensions) and goes to an accountant for advice on how to handle it, does the accountant have a duty to revenue to inform them or does the accountant have a duty of trust with the client.

Is it better, in light of the current circumstances, for a pensioner to negotiate with revenue directly or if one uses an accountant will they throw the book at you.

The above is for someone else who is related to me but the person at issue is not related. In this particular case revenue have not sent any letters, we believe it is something that has not come to light for revenue yet. More anon on the other thread.
 
I presume that, like anybody else, an accountant cannot legally facilitate tax evasion (or illegal avoidance) but will work with the client and in their best interests to settle any outstanding issues. I don't know if there is any mandatory reporting though. If there are outstanding issues and the amounts are not trivial then I reckon that it's probably worth engaging a good accountant/tax advisor.
 
Thanks Clubman, that's the word I should have used, mandatory reporting. The figure is between 20K and 30K but no doubt penalties are not built into that. Not sure if it was evasion or 'misunderstanding'.

The reason for not going to an accountant is that as revenue are being forced into a softly softly approach with pensions it might be better to go that route rather than via the professionals. Other option is to let sleeping dogs lie.
 
There are many reasons why tax may have been underpaid & why this would not be regarded as "evasion". Accountants are there to give professional advice and are not under any obligation to report underpayment of tax to the Revenue. (The circumstances you broadly describe semm to indicate a misunderstanding of taxable income). I would advise getting a recommendation for a "good" accountant and he/she will save both money & stress in the long term by handling the issue with the Revenue and giving professional advice.
 
An accountant or tax advisor does not have to report the "breach" if the client is committed to correcting it and bringing his/her tax affairs up to date.

If this person hasn't been contacted by Revenue it may be possible to make an unprompted disclosure and avail of mitigated penalties.

My advice would be to act fast and speak to an accountant ASAP.
 
Penalties based on the tax under paid only apply where a person has submitted an incorrect return and fixed penalties for non-submission of a return can, obviously, only apply to someone who was obliged to make a return.

For tax purposes, social welfare payments are deemed to be "emoluments" and a person whose only income is from emoluments is not required to make a tax return (unless requested to do so by the Revenue). So, a pensioner whose only income was an Irish occupational pension and an Irish social welfare pension will not face any penalties for underpayment of tax.
 
Personally I would contact Revenue directly, rather than through an accountant if the matter is fairly straightforward.
If the accountant does everything by the book, there could well be interest and penalties included with the submission, whereas quite often Revenue do not go looking for such. They could, but generally are happy just to get any back tax that may be due.
 
The obligation to report would come from [FONT=&quot]Section 59 of the Criminal Justice (Theft and Fraud Offences) Act, 2001, and [/FONT][FONT=&quot]The Criminal Justice (Money Laundering and Terrorist Financing) Act 2010 as tax evasion and the assisting of it is considered a criminal offense.

An accountant who does not report such an offense to the revenue (or Gardai) are themselves committing a money laundering offense also.

However, under s42 of that act it is permitted to invoke professional privilage provided that the accountant is advising the client by helping them to manage their tax arrears in order to make them tax compliant.

So basically as long as the accountant is advising the client they cannot (and must not) report the underpayment of tax to the revenue.

However if the client then decides to not pay over the tax that is due and to subsequently get rid of their accountant, then technically at that point there is a mandatory reporting requirement to report the breach to revenue and/or the gardai.

Capnhand
[/FONT]
 
If your relative is considering going in person to disclose this situation to revenue please make sure that person has a good understanding of how the system works. Hopefully this is an error or misunderstanding rather than something deliberate.
While I have had many discussions with revenue, in person and by phone and found them most courteous and helpful don't forget they talk in "Civil Service Speak" at a very speedy pace.
It's very easy to loose track. Make sure your friend has a payment plan prepared and is able to negotiate
 
Nige said:
Penalties based on the tax under paid only apply where a person has submitted an incorrect return and fixed penalties for non-submission of a return can, obviously, only apply to someone who was obliged to make a return.

For tax purposes, social welfare payments are deemed to be "emoluments" and a person whose only income is from emoluments is not required to make a tax return (unless requested to do so by the Revenue). So, a pensioner whose only income was an Irish occupational pension and an Irish social welfare pension will not face any penalties for underpayment of tax.
Click to expand...


Thanks to everybody, I have a fair idea now of how it works.

Nige, what you've written above I think is the scenario that I'm going to outline, but revenue doesn't seem to have realised it yet but no doubt they are reading on here.

Apparently it was common for Irish women to go under the PRSI number of their husband in the past, so one number. Both working one for the state, on his death, she applied for widower's pension and apparently was issued with a new PRSI number. So got his pension under his PRSI number plus the 'credits' and also got her own pension under her own PRSI number and got 'credits/allowances there two. So two sets of allowances. Does this make sense. I in no way know if it was deliberate.
 
Bronte said:
Apparently it was common for Irish women to go under the PRSI number of their husband in the past, so one number.
Click to expand...
http://www.welfare.ie/EN/OperationalGuidelines/Pages/cis_ppsallprocs.aspx#2
2.10 Level W Numbers

In the past married women used their husband's PPS/ RSI number with the letter W added to indicate "wife". While Level W numbers are no longer allocated, existing numbers are still valid.
The Department's policy is to replace all Level W numbers. Where a customer with a Level W number attends an Office and requests that this number is changed for tax or other purposes, the customer should be facilitated. Where a Level W number is traced in the normal course this should also be changed. The procedures for dealing with Level W numbers are at Appendix 3.
Click to expand...
 
Never knew that. I and my husband have our own PRSI number but for our Irish rental income we submit only under his number, but interesting a sibling was advised by a top revenue official who sorted out a revenue mess for him to get a new Prsi number so that the mess would leave the system in future years. He doesn't know how to get a new number though. Interestingly about 3 years ago one of my tenant's applied for rent allowance or some allowance and gave my husband's and my name but they didn't have my surname and low and behold revenue wrote to us as one person Mr X and Y Smith and gave us a new number (since extinguished).
 
Bronte said:
advised by a top revenue official who sorted out a revenue mess for him to get a new Prsi number so that the mess would leave the system in future years. He doesn't know how to get a new number though.
Click to expand...
Strange advice! And something that I did not think was generally possible.

On the other hand I myself had a different PRSI number years ago (because I lied about my age to start working part time one summer when under age! :)) compared to the one I got when I started working "proper" and have retained to date... ;)
 
If there is even an outside risk of a significant liability, the taxpayer should not attempt to negotiate directly with Revenue without professional representation, unless they have a strong knowledge of Revenue powers and their own legal rights.

When engaging an accounant, the taxpayer should not worry about the impact of the Criminal Justice (Theft and Fraud Offences) Act, 2001 upon their relationship with the accountant, unless (1) they have been wilfully and deliberately evading tax; and (2) they intend to continue the evasion.

In that sort of situation (which is extremely rare), the accountant would be expected to advise the taxpayer to seek independent and separate legal advice on the matter, before making any decision to continue with the evasion.[FONT=&quot]
[/FONT]
 
An accountant advised the person to do nothing. Even so they are going to go about sorting it out as the worry is getting to them.
 
Bronte said:
He doesn't know how to get a new number though. Interestingly about 3 years ago one of my tenant's applied for rent allowance or some allowance and gave my husband's and my name but they didn't have my surname and low and behold revenue wrote to us as one person Mr X and Y Smith and gave us a new number (since extinguished).
Click to expand...

That's not unusual. Where a husband & wife jointly own a property and are renting it out, in recent years Revenue have started to treat this "entity" as a separate partnership for tax purposes. A partnership requires a different PPSN to those of the individual partners.
 
T McGibney said:
I wonder was this a real accountant or a Bertie-type character who calls themselves an 'accountant' because they once worked in an office ;)
Click to expand...

I was going to make a similar point - but only a little more diplomatic!

I have come across real accountants, who don't work in practice, giving advice like this, not just the "accountants" to which TMcGibney refers.

One would hope that the accountant that was consulted has been given all the facts and has concluded that no action is necessary based on those facts, rather than adopt a "keep your head down and sure it'll be grand" type of approach.

The basic principle still applies: if you've undisclosed income, declare it.
 
You must log in or register to reply here.
Back
Top