Key Post Should I seek tax advice from Revenue?

Time and time again, posters indicate their intention to contact Revenue for advice.

This is an appalling idea, for a number of reasons.

Primarily, it’s because Revenue’s job is to collect as much tax as possible. They are not in the tax advice business, and are utterly conflicted. It’s analagous to asking a potential buyer of your house for advice on the negotiation tactics you might use to obtain the highest possible price.

The second issue is the quality of the advice that you may receive. Parking the fact that Revenue are utterly conflicted, other than in the upper echelons, their staff tend to be poor technically but very dangerous in terms of their ability and willingness to deliver completely incorrect advice with total conviction. And the problem is that the people manning the phones (who tend to be a taxpayer’s first point of contact) are generally the least qualified and have the least ability; a very dangerous combination.

Gordon

Hi Gordon

A very good post - I have made it a key post.

Is there scope for asking Revenue for writtten clearance on a transaction?

Not so much advice but factual stuff.

Do tax advisors not ask Revenue their atttitude without disclosing the identity of the client?

I think it depends on the advice needed, if it's straightforward PAYE advice, allowances, medical expenses etc. my experience of Revenue is positive.

Gordon Gekko said:

Primarily, it’s because Revenue’s job is to collect as much tax as possible.

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I don't agree with this. Their job is to collect the correct amount of tax. If it was discovered that they collected say a billion more in tax in a given year than they should have, who would be saying ' they did a good job'?

Ten years ago I had difficulty with the paid advice I was receiving from my accountant about my tax returns. As a result of contacting Revenue and their advice I saved a five figure sum in tax over a few years. Needless to say I changed accountant and have not had the need to contact Revenue since.

I think it's one of those cases where it all depends.

When I was starting a new business a few years ago, it was unclear what VAT rate should be charged for some goods - although there's plenty of information out there, there was still room for ambiguity. I emailed Revenue with details, and they emailed back the VAT rates to apply. As far as I'm concerned, if they ever query it in future (e.g. during an audit), I have it in writing an explicit statement from them what VAT rate to apply, which strikes me as being in a much stronger position than "it's what I thought was correct" or "it's what my accountant told me".

I don't see any harm in getting information like this from Revenue, and in fact I'd say it's by far the best source of information.

Gordon Gekko said:

Time and time again, posters indicate their intention to contact Revenue for advice.

This is an appalling idea, for a number of reasons.

Primarily, it’s because Revenue’s job is to collect as much tax as possible. They are not in the tax advice business, and are utterly conflicted. It’s analagous to asking a potential buyer of your house for advice on the negotiation tactics you might use to obtain the highest possible price.

The second issue is the quality of the advice that you may receive. Parking the fact that Revenue are utterly conflicted, other than in the upper echelons, their staff tend to be poor technically but very dangerous in terms of their ability and willingness to deliver completely incorrect advice with total conviction. And the problem is that the people manning the phones (who tend to be a taxpayer’s first point of contact) are generally the least qualified and have the least ability; a very dangerous combination.

Gordon

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So apart from opinion could you perhaps provides with actual examples of this?

admin said:

Is there scope for asking Revenue for written clearance on a transaction?

Not so much advice but factual stuff.

Do tax advisors not ask Revenue their attitude without disclosing the identity of the client?

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Revenue publishes this page on its website dedicated to tax professionals, but which can be viewed by anyone.

Jim2007 said:

So apart from opinion could you perhaps provides with actual examples of this?

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Good man Jim.

Here are two specific examples; I could give you hundreds:

Example 1: Individual studying for Masters, told three times over the phone and once in writing that his course did not qualify for tax relief because it was not on the prescribed list. It did, and the concept of a prescribed list was preposterous, yet many layers within Revenue clung to it like a limpet.

Example 2: Individual who paid CGT based on the maximum possible consideration where the sales price was uncertain. Individual applied for a refund six years later when some of the consideration became irrecoverable. He was told twice over the phone and three times in writing that Revenue could not process the CGT refund because of Section 865 TCA 1997 (the “four year rule”). This was utter horse manure.

Gordon

If you were playing against Manchester United at Old Trafford, and a 50/50 call arose, would you ask Jose Mourinho to opine on it?

Gordon Gekko said:

Good man Jim.

Here are two specific examples; I could give you hundreds:

Example 1: Individual studying for Masters, told three times over the phone and once in writing that his course did not qualify for tax relief because it was not on the prescribed list. It did, and the concept of a prescribed list was preposterous, yet many layers within Revenue clung to it like a limpet.

Example 2: Individual who paid CGT based on the maximum possible consideration where the sales price was uncertain. Individual applied for a refund six years later when some of the consideration became irrecoverable. He was told twice over the phone and three times in writing that Revenue could not process the CGT refund because of Section 865 TCA 1997 (the “four year rule”). This was utter horse manure.

Gordon

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I don't particularly disagree with your position on this issue, other than your comment about Revenue trying to maximise the tax take. My take on it would be that Revenue's staff are roughly equally as likely as an equivalently remunerated private sector tax/accounting professional to err...

Both of the examples cited are of people making claims, rather than seeking advice, and I could certainly see plenty of staff in practice thinking the position adopted by Revenue was correct.

The amount of people - in both practice and Revenue - who can't / don't / won't actually read the legislation is shocking.

Sophrosyne said:

Revenue publishes this page on its website dedicated to tax professionals, but which can be viewed by anyone.

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That is a good service.

In particular, I have a vague memory of using this service some years ago.

Revenue Technical Service

The Revenue Technical Service (RTS) operates within the four Revenue Regions and handles complex technical issues on which practitioners and business taxpayers may need clarity.


This service, however, should not be used as a first point of contact by either practitioners or businesses. Revenue expects that practitioners and business taxpayers will have researched and analysed the issue themselves in the first place. Where the answer remains unclear they should then seek the assistance of this service.

The wording of this seems to back up mandlebrot's comment

torblednam said:

The amount of people - in both practice and Revenue - who can't / don't / won't actually read the legislation is shocking.

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I was thinking of buying a product in America. I could not figure out if customs duty would be payable. I had assumed it would be but I just had no idea what rate it would be. I could not figure out the Revenue's website.

I used the My Enquiries on ROS. I sent them a link to the website where I would be buying the product and they responded the following day with a definitive answer.

I was very impressed.

On the other hand, when after selling a house as executor, I could not find out online how to pay the Capital Gains Tax. I rang Revenue and it was clear to me that the answer was wrong - she told me that the CGT was payable by each of the beneficiaries. I asked for her supervisor and got the same wrong answer. Gordon described it perfectly here:

Gordon Gekko said:

their staff tend to be poor technically but very dangerous in terms of their ability and willingness to deliver completely incorrect advice with total conviction.

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Brendan

Perhaps Revenue should segregate its contacts handling into areas of expertise.

Straightforward enquiries could be handled by most officials but issues, such as CGT, estate liability, etc., could be directed to an expert group.

Sophrosyne said:

Perhaps Revenue should segregate its contacts handling into areas of expertise.

Straightforward enquiries could be handled by most officials but issues, such as CGT, estate liability, etc., could be directed to an expert group.

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The problem is that even straightforward enquiries have a tendency to be butchered (e.g. does my course qualify for tax relief?).

Perhaps, but it would be a start.

I’m not sure of the situation in Revenue but certainly in large companies there can be issues surrounding manpower so that people may be assigned work for which they are insufficiently trained or lack required expertise.

If more complex work were assigned to the more skilled and experienced the others could then concentrate on becoming more expert on the straightforward.

In the long run it would probably save work through elimination of time spent on repeat contacts and correcting error.

Hi Sophrosyne,

There are two issues...competence and inherent bias. Revenue are utterly conflicted and should not be relied upon for impartial advice.

Gordon

Gordon,

Besides the competence issue, when you say that Revenue is conflicted what are you getting at?

Gordon Gekko said:

There are two issues...competence and inherent bias. Revenue are utterly conflicted and should not be relied upon for impartial advice.

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Why do you say they are conflicted? As someone else points out, their role is to collect the correct amount of tax, not to maximise it according to personal whims. Although it's a few years ago now, I recall speaking with someone in their IT section: they were far more concerned internally about the possibility of over-charging rather than under-charging. I got the impression this was part of an wider organisational culture. It wouln't surprise me if that was indeed the case.

As for competance, it would be rare for any organisation to put highly trained experts in the front-line. Hence my recommendation to get any advice in writing, as that can be directed to the particular section. If you don't like what's said of feel it is incorrect, you can always query it, but it's better to get that done with first before the fact rather than try and argue the case after it, based on what you think or what you were told by someone else.

I think many people have an extreme reluctance to contact Revenue in relation to anything. Maybe they think they are drawing attention to themselves or something, which is a bit mad. I've always found them to be very open to responding to queries, though they can be slow in getting back.

llgon said:

I don't agree with this. Their job is to collect the correct amount of tax.

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This is literally hilarious. You have clearly never sat through an adversarial Revenue Audit nor witnessed the attempted and actual shakedowns that often follow them.

llgon said:

If it was discovered that they collected say a billion more in tax in a given year than they should have, who would be saying ' they did a good job'?

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More hilarity. Ever read a Revenue Annual Report?

Sophrosyne/newtothis,

With respect, your viewpoint is very naive; as Tommy has indicated, they’re like zealots and will happily bully and intimidate taxpayers with a view to collecting as much tax as possible. In my experience, they are often appalled that a taxpayer might be entitled to a relief/exemption.

The fact that anyone could think that they’ll get independent or high quality advice from Revenue is laughable.

Gordon

T McGibney said:

You have clearly never sat through an adversarial Revenue Audit nor witnessed the attempted and actual shakedowns that often follow them.

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I think that in Revenue Audits, they are trying to maximise their take. In most cases, they suspect that there is something hidden.

But I doubt if that is true for Revenue generally. They are clearly not going to give tax planning advice. But I don't think that they would intentionally mislead taxpayers to increase the tax yield.

Brendan