Revenue 'audit' letter for bank savings

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Black Sheep said:
I don't see anything extraordinary in the OP amount of savings. A friend of mine is in a similar income range (with no nixers) and is desperately saving to buy a property. He lives at home with mum who provides all the home comforts free (Her way of helping him to get on the housing ladder) and as he is studying there very little time at the moment for socializing. Living costs for him are minimal, hence the large savings
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You mustn't understand the meaning of the word extraordinary so!

Here's a dictionary definition:
1. beyond what is usual, ordinary, regular, or established.

I would say it is unusual, the proof of this being that you know ONE person who is in a similar situation to this guy. I'm in the same age bracket and I don't know anyone in that situation! (And besides, 55k is nearly enough to buy a house these days, never mind say a deposit!)
 
mandelbrot said:
You mustn't understand the meaning of the word extraordinary so!

Here's a dictionary definition:
1. beyond what is usual, ordinary, regular, or established.

I would say it is unusual, the proof of this being that you know ONE person who is in a similar situation to this guy. I'm in the same age bracket and I don't know anyone in that situation! (And besides, 55k is nearly enough to buy a house these days, never mind say a deposit!)
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I'm not so sure. I certainly wouldn't count this as extraordinary. I know plenty of people in their early-30s who managed to put down a decent deposit on the purchase of their first home during the boom period. Some of these people also had money saved for stamp duty. Even back then, 70% or 80% mortgages were quite common, even for first time buyers.

It shouldn't be beyond anyone, who has been working for 10+ years in a reasonably-well paid job, living at home, and living fairly frugually, to save in the region of €5,000 a year. If they saved the equivalent of the max. SSIA sum of €254 per month (as many thousands of people comfortably did) they would be more than halfway there.
 
A lot will depend on how much salary the guy is/was earning and how long he has been saving for
 
T McGibney said:
I'm not so sure. I certainly wouldn't count this as extraordinary. I know plenty of people in their early-30s who managed to put down a decent deposit on the purchase of their first home during the boom period. Some of these people also had money saved for stamp duty. Even back then, 70% or 80% mortgages were quite common, even for first time buyers.

It shouldn't be beyond anyone, who has been working for 10+ years in a reasonably-well paid job, living at home, and living fairly frugually, to save in the region of €5,000 a year. If they saved the equivalent of the max. SSIA sum of €254 per month (as many thousands of people comfortably did) they would be more than halfway there.
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I suppose we could argue in hypotheticals all day, since we don't really know the specifics, but I take your point about the preference of some people for a lower LTV mortgage. without wanting to split hairs, I was working on the assumption of the money being saved over 5/6 years (although from rereading the OP that's not necessarily the case!).

Now, as I said I'm hitting 30 as are most of my friends, and I don't know many people (with a proper job) whose parents would be happy to have their offspring living rent free with them at this stage of their life!

Certainly if he accumulated the money over a longer period he'll probably get off the hook, but if he's gone from pretty much 0-55k in 5 years, and assuming 5years ago he was earning less than the 35k he's on now, then he'd have to be leading a monastic lifestyle!
 
I don't see anything strange in saving 55K in 5 years, if living expenses are minimal. If this guy had the sense to use odd job money as pocket money and not to lodge it regularly into his accounts, he doesn't have anything to worry about. He should just show the Revenue the proof of his PAYE earnings for the relevant years. If these tally with the lodgements into his accounts, this is all there is to it.
 
mandelbrot said:
I suppose we could argue in hypotheticals all day, since we don't really know the specifics, but I take your point about the preference of some people for a lower LTV mortgage. without wanting to split hairs, I was working on the assumption of the money being saved over 5/6 years (although from rereading the OP that's not necessarily the case!).

Now, as I said I'm hitting 30 as are most of my friends, and I don't know many people (with a proper job) whose parents would be happy to have their offspring living rent free with them at this stage of their life!

Certainly if he accumulated the money over a longer period he'll probably get off the hook, but if he's gone from pretty much 0-55k in 5 years, and assuming 5years ago he was earning less than the 35k he's on now, then he'd have to be leading a monastic lifestyle!
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If he's living with parents and paying no rent (bizarre in your 30s if you have a job, but anyway), then, assuming that if he'd had a mortgage he might be paying 1k a month on it (hardly unusual for people in this earning bracket in the last few years!) that's 60k saved.

So it's certainly possible (though not, perhaps, likely) that the savings are made up largely of legitimate declared income.
 
xanadu1 said:
If he's living with parents and paying no rent (bizarre in your 30s if you have a job, but anyway)
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Actually it is not that bizarre according to the [broken link removed]
AS MANY as one in three Irishmen and nearly one in six Irish women aged between 25 and 34 live at home with at least one of their parents. :eek:
 
But to pay no rent?? Surely that's a bit strange if you are an adult with a fulltime job.

I was asked to contribute towards the household bills when I got my first job at age 18. Not a huge amount but it was the principle of learning to pay your own way.

edited to add: btw, I'm only 30 so this isn't some "in MY day" type rant.
 
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Yes, the same here, I think little Johnny and Mary are wrapped too much in cottonwool these days.
 
My parents in law allowed all their children to live at home as long as they wanted - so long as they were unmarried:) And didn't look for any financial contribution. The children were generally roped in some work around the house, cutting the grass etc, but the revenue can hardly prove that, put a value on this work and charge tax :):)

Actually, only one of the boys lived at home all the time until he got married (others had to move for work), but he certainly saved a handsome deposit:)

I also know several others who live at home without contributing anything financially. Some even moved in with their parents after getting married, so as to save money for a deposit.

I think it depends on family attitudes and financial means. Though it is not for the Revenue to pass moral judgement on people - whether they should be living at home rent-free or not, there is no law to forbid it:) And - as yet - no law to tax it:) All the Revenue can do is demand proof of source of funds and bank statements. If they can't find any evidence of undeclared income, than that's the end of it:)

Also, even if someone on 35K p.a. pays a little something to his parents towards his living expenses, he can still save plenty.

A lot of Irish parents actually helped their children to get on the property ladder by giving them gifts of money for a deposit and/or acting as a guarantor. Compared to that letting your child live with you for a few years rent-free to save for a deposit is relatively pain-free and is quite widespread. At least I know more people living with their parents rent-free than those who pay anything.
 
Greta said:
My parents in law allowed all their children to live at home as long as they wanted - so long as they were unmarried:) And didn't look for any financial contribution. The children were generally roped in some work around the house, cutting the grass etc, but the revenue can hardly prove that, put a value on this work and charge tax :):)

Actually, only one of the boys lived at home all the time until he got married (others had to move for work), but he certainly saved a handsome deposit:)

I also know several others who live at home without contributing anything financially. Some even moved in with their parents after getting married, so as to save money for a deposit.

I think it depends on family attitudes and financial means. Though it is not for the Revenue to pass moral judgement on people - whether they should be living at home rent-free or not, there is no law to forbid it:) And - as yet - no law to tax it:) All the Revenue can do is demand proof of source of funds and bank statements. If they can't find any evidence of undeclared income, than that's the end of it:)

Also, even if someone on 35K p.a. pays a little something to his parents towards his living expenses, he can still save plenty.

A lot of Irish parents actually helped their children to get on the property ladder by giving them gifts of money for a deposit and/or acting as a guarantor. Compared to that letting your child live with you for a few years rent-free to save for a deposit is relatively pain-free and is quite widespread. At least I know more people living with their parents rent-free than those who pay anything.
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Holy cow, you must've been on the wine with your dinner, you're feeling very smiley about things in that post...!

I think the discussion has been somewhat sidetracked down this discussion of whether or not this guy could have saved all of the money legitimately. Everyone has their own anecdotal stories of people who have / do enjoy the generosity and goodwill of their parents while saving to get their own place.

However, given the fact that the OP has told us that the guy in question has earned untaxed money, then it becomes a bit redundant to argue about whether or not he could have saved all of the money legitimately, when clearly he hasn't!

The most worrying part of your post Greta is ...
Greta said:
All the Revenue can do is demand proof of source of funds and bank statements. If they can't find any evidence of undeclared income, than that's the end of it:)
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It appears that you are quite happy that he may get off the hook. Personally I'm not happy. I pay tax on all of my income. So I'd like for everyone else to do the same, and if they did then we might all individually pay slightly less! We're all in it together, so why should any of us who pay our fair share have the attitude that its acceptable for anyone else not to?

So what I'll smile about is the thought that maybe this guy hasn't been clever, that he's kept his cash in a jar and lodged it to his savings account in blocks of a thousand here and there, and has no explanation for it, and gets to pay all of the tax he originally should have, with a suitable penalty and some interest. :)
 
mandelbrot said:
It appears that you are quite happy that he may get off the hook. Personally I'm not happy. I pay tax on all of my income. So I'd like for everyone else to do the same, and if they did then we might all individually pay slightly less! We're all in it together, so why should any of us who pay our fair share have the attitude that its acceptable for anyone else not to?

So what I'll smile about is the thought that maybe this guy hasn't been clever, that he's kept his cash in a jar and lodged it to his savings account in blocks of a thousand here and there, and has no explanation for it, and gets to pay all of the tax he originally should have, with a suitable penalty and some interest. :)
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I am not losing my sleep over whether somebody on some forum will get caught over a few untaxed quids or not. Neither would it bring huge joy in my life if they did:) if you feel differently, that's your business, of course:)

My comments here were about two things: that it is quite possible to save that much money legitimately; and that the Revenue is very unlikely to prove that the OP's friend's son didn't pay all the tax he should.

I personally pay all my taxes as I want to sleep well at night not worrying whether I get caught or not:) But there are much bigger offenders out there than this guy, even if he didn't pay a small amount of tax that he should have. I don't see any point getting myself excited over prospect of him getting caught, and I doubt very much that he will be, whatever your wishes or mine:) I seem to remember vaguely reading somewhere that the Revenue was going to investigate bank accounts with either a considerable sum of money or those that paid considerable interest, I can't remember which. I think this guy probably fell into this category. So unless he had been really stupid or panics into rushing to confess, he really has nothing to worry about. IMHO.
 
Thanks

Thank you all for feedback- my friend and her son are law abiding citizens I think and hope, you will be all glad to hear. The son is particularly hardworking. Only reason I posted message here was that 'panic' was that they never received any letters from Revenue like this 'audit' before- som people are pros at correspondence with the Revenue. So all the input and advice appreciated.
 
Mind you don't Social welfare put a value on board & lodgings for people who live at home with their parents when they apply for benefits? So whats to stop revenue from doing the same? maybe taxing board and lodgings as a benefit in Kind?
 
MarySmyth said:
Thank you all for feedback- my friend and her son are law abiding citizens I think and hope, you will be all glad to hear. The son is particularly hardworking. Only reason I posted message here was that 'panic' was that they never received any letters from Revenue like this 'audit' before- som people are pros at correspondence with the Revenue. So all the input and advice appreciated.
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Your friend's son is not a law abiding citizen. He is a tax evader and he is stealing from all of us. I hope that Revenue throw the book at him.
 
BazFitz said:
Your friend's son is not a law abiding citizen. He is a tax evader and he is stealing from all of us. I hope that Revenue throw the book at him.
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This is a very sweeping statement. How can you be certain that PAYE was not applied to the 'odd jobs' highlighted earlier?

Employers are obliged to operate PAYE on all employments, including part-time or casual employments.
 
Derry said:
Mind you don't Social welfare put a value on board & lodgings for people who live at home with their parents when they apply for benefits? So whats to stop revenue from doing the same? maybe taxing board and lodgings as a benefit in Kind?
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Because there is no basis for this in the tax code.
 
BazFitz said:
Your friend's son is not a law abiding citizen. He is a tax evader and he is stealing from all of us. I hope that Revenue throw the book at him.
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Does it make you feel better for making such a sweeping statement when you know nothing much about the person concerned.:rolleyes:
 
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