Misappropriated Tax Credits Now Massive Tax Bill Looming, any advice, please?

[ptsmary]

Any advice would be greatly appreciated, please.
The story so far...My husband and I were both self employed registered directors of our own company which we ran together for 10 years, 2011 the writing was on the wall that it was no longer sustainable, so we started the process of winding down and eventually liquidating the company.
My husband started full time work Sept. 2011, fully tax compliant, standard PAYE, PRSI etc. I was drawing no salary from the business as was shutting down.
March 2012, I took some employed part time work again fully tax compliant, salary was small so my husband kept my tax credits.
May 2012 my work through agency hours was building, still husband held my tax credits.
June 2013 I had built up enough agency work to look for my tax credits back, called tax office asked for my tax credits back, from then on thought all was in order, no concerns....until Dec 2015 accountant ( who had helped my husband set up another - non trading company - as he was uncertain as to how secure his work was) noted from ROS that I had mine and husband tax credits and husband had mine and his own tax credits, when tax office had made switch over in June 2013 they had actually not switched off my husband use of my tax credits, so we were double beneficiaries......
Sounds so ridiculous that not noticed before, fact that we were jointly assessed why did tax office not notice? We didn't notice, honestly, because we could see no discrepancy between mine and my husbands payslip we were both paying the same tax, had both been out of PAYE PRSI employment for c. 11 years, so were sooo unfamiliar with tax credits etc.
***we have rectified tax credits with tax office, but now are facing bill with revenue for under payment of tax for 2013, 2014 & 2015, c. 7K each year, both our salaries are in the 45-55K range.
We do not have this money, yes we do know that it was money we were not entitled to, we do not need to be told that, but the fact of the matter is with 4 teenagers, c. 160 extra/2weeks it isn't long evaporating.
We have no pot of savings to draw from, do you think we can negotiate some way with the revenue, has it been done before, we are are prepared to drag out repayments over years, is this possible. It is a real pickle but one which we have no way out if we can't negotiate. Please help?

 

[Joe_90]

This always amazes me how this can happen, how the Tax Office can allocate the same credits to a husband and wife. Was 2013 on a week 1 or cumulative basis?

Anyway you got €3,300 extra and the extra €9,000 on the standard rate so around €5,000 per annum.

I'd imagine that the Tax Office would accept a payment plan perhaps over three years if it's their fault.

 

[cremeegg]

If the Revenue allocated your tax credits to your husband and to yourself, as you say, then certainly it is not your fault.

While obviously you paid less tax than you should have done, you did nothing wrong, accepting that things happened as you say.

I would be quite strong with Revenue here, you paid tax in line with the credits they issued, if there was a requirement to file a self assessment in any of those years it might be a little different, but if all income was subject to PAYE and you provided all the correct information and paid the tax demanded, then its not your problem.

If you refuse to and they issue a demand you can appeal that, I cannot see any Revenue officer going in front of an appeal tribunal saying, "we cocked up" and now we want to have a second chance to do things correctly.

If you are going back into business you need to be careful that Revenue dont mark you down for special attention, if you will be PAYE only that is less an issue. In fairness Revenue tend to play straight, in my experience they don't bully people.

 

[Sophrosyne]

It appears that whatever went wrong happened in June 2013.

At that time, were either you or your husband registered for self-assessment?

 

[Jon Stark]

If the Revenue allocated your tax credits to your husband and to yourself, as you say, then certainly it is your fault.

While obviously you paid less tax than you should have done, you did nothing wrong, accepting that things happened as you say.

I would be quite strong with Revenue here, you paid tax in line with the credits they issued, if there was a requirement to file a self assessment in any of those years it might be a little different, but if all income was subject to PAYE and you provided all the correct information and paid the tax demanded, then its not your problem.

If you refuse to and they issue a demand you can appeal that, I cannot see any Revenue officer going in front of an appeal tribunal saying, "we cocked up" and now we want to have a second chance to do things correctly.

If you are going back into business you need to be careful that Revenue dont mark you down for special attention, if you will be PAYE only that is less an issue. In fairness Revenue tend to play straight, in my experience they don't bully people.

There is no grounds on which an appeal could succeed in the circumstances outlined by the OP.

Yes, it appears Revenue allowed their system to reflect the same tax credits to 2 people, but in law the onus is on the individual to ensure their affairs are in order.

Revenue have the right to revisit this in the case of PAYE taxpayers (i.e. Non chargeable persons) for up to 4 years, and since the issue arose in 2013 it will have to be dealt with.

The OP's tax office may be sympathetic in the circumstances and may be able to consider a payment plan over a period longer than might otherwise normally be the case.

 

[PMU]

This always amazes me how this can happen, how the Tax Office can allocate the same credits to a husband and wife. Was 2013 on a week 1 or cumulative basis?

Anyway you got €3,300 extra and the extra €9,000 on the standard rate so around €5,000 per annum.

I'd imagine that the Tax Office would accept a payment plan perhaps over three years if it's their fault.

Revenue will ask for the tax owed to be paid back either as a lump sum or as separate lump sums for each year owed. The 'payment plan' they offer will be for Revenue to collect the tax owed by taking it from your tax credits. This can reduce considerably your take home pay. If, as Joe_90 asks in post #2, this has resulted from Revenue taxing you on a week 1 instead of on a cumulative basis, you should write now to Revenue telling them to put you on a cumulative basis, otherwise the problem will occur again next year.

 

[cremeegg]

There is no grounds on which an appeal could succeed in the circumstances outlined by the OP.

Yes the OP does owe the money to Revenue, however if the circumstances are as outlined this is an embarrassing situation for Revenue, and I think the Op is in a strong negotiating position.

 

[ptsmary]

if there was a requirement to file a self assessment in any of those years it might be a little different

Thank you all for advice, one line, above, stands out, my husband did set up a company with the help on an accountant, it never traded no income in or out, BUT accountant/husband did not fulfill obligation to file return for 2013 & 2014 until last Friday, so now return has been filed indicating no activity in the company, but also drawing the whole spotlight on the revenues (and our ignorance - in the true sense of the word) mistake/oversight.
Do we call the revenue before they issue demand letter or do we wait now for demand letter?
2015, still a mess, as tax credits not sorted until end of 2015 - but we are considering borrowing money to amount needed to offset liability through investing in a PRSA instead?
Or do we just lump in 2015 revenue bill as well into repayment plan?
Such a mess and the ironic thing is we were 100% blissfully ignorant, my payslip was same as his! and since we are of the older generation that does not discuss our payslip with any work colleagues we did not know we were paying way less tax then anyone else. Ridiculous as it may sound.
My employer advises still on week 1 basis..!