# rent a room tax query.



## serotoninsid (4 Sep 2006)

I have searched the forum and found some very useful info on the rent a room scheme.  However, I still have outstanding questions which some of you may be able to help with.

The following hypothetical scenario...
A homeowner rents out rooms, receives payment in cash and doesnt issue receipts (as never been asked for them).  The homeowner declares 'rent a room' income on the form  12 for the year.  Revenue come back to him querying the total amount of rental income on the basis that it doesnt reconcile with the amounts tenants have claimed relief on.

Would the revenue be in a position to challenge this fully if there are no receipts in existance?


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## ClubMan (4 Sep 2006)

serotoninsid said:


> Revenue come back to him querying the total amount of rental income on the basis that it doesnt reconcile with the amounts tenants have claimed relief on.


Is the tenant claiming relief on more or less than the amount actually paid in rent?


> Would the revenue be in a position to challenge this fully if there are no receipts in existance?


I presume that _Revenue _can look for other evidence of any sort of transaction where they deem it appropriate.


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## liteweight (4 Sep 2006)

I thought you had to issue receipts if you participated in the Rent a Room Scheme.


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## serotoninsid (4 Sep 2006)

liteweight said:


> I thought you had to issue receipts if you participated in the Rent a Room Scheme.


According to    explanation  of  'tax relief for tenants'....


> In order to claim tax relief,......................a receipt for rent you have paid must be provided if and when it is requested by Revenue. This rule applies regardless of whether you pay your rent directly to the landlord or to           an agent on behalf of the landlord. Each receipt must show the following:
> Landlord's name, PPS Number and address
> Amount of rent which you have paid
> Period of time covered by the receipt


The oasis section on the 'rent a room' scheme clarifies that theres no rent book required under this scheme. I also pulled up a revenue page earlier that said that the landlord 'must provide a receipt *when requested* by the tenant. To me that means that theres no obligation to provide them if a tenant doesnt ask for them.


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## serotoninsid (4 Sep 2006)

ClubMan said:
			
		

> Is the tenant claiming relief on more or less than the amount actually paid in rent?



More than actual.


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## funlovin (5 Sep 2006)

if you recieved more than 7400 euro (i think )you must pay tax on all the income ,you only recieve the relief if you recieve less than that .one euro over and it all becomes liable,if i were u i would say you only recieved in total an ammount under the threashold,if theres no paper trail .....stick to your guns .and learn your lesson


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## Greenhorn (5 Sep 2006)

Glad I had a look at this thread. I was on to Revenue yesterday on behalf of my daughter a FTB with a large mortgage. She's two friends sharing with her and as it's under the threshold qualifies under rent a room. My query was 'does she have to notify Revenue and is there any form to fill in?' I was assured by a very chatty and confident Civil Servant that she definitely did not have to notify Revenue. Based on previous experience with Revenue information (I as told categorically that if parent sells to child CGT is on amount received, not market value - WRONGGGG!) so I pressed her on it. She told me she was absolutely certain no obligation to inform Revenue. I then asked if the income went over the threshold, would tax be due on full amount or balance. Again  'absolutely certain' on balance only. Reading this thread, it seems she was wrong on both counts. Could Revenue, during their  Staff Training sessions, when they are not available to the public, not tell them to check facts rather than give their uninformed opinion as fact?


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## ClubMan (5 Sep 2006)

_Revenue _only dispense information and not advice and the information can be wrong. If in doubt get indepdenent professional advice. Rent a room income certainly should be declared even if it is exempt from tax. There is another recent thread on this very issue here on _AAM_.


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## Greenhorn (5 Sep 2006)

Indeed it can be wrong and often is! I re-iterate, if they're not sure, why don't they just say so and offer to check and come back with accurate information?


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## liteweight (5 Sep 2006)

Perhaps your daughter should issue receipts in order to avoid the situation the OP is in! I agree that Revenue staff are sometimes not fully aware of tax issues. Of course she has to fill in the form every year and the receipts become even more important if her friends start to claim tax credits on rent.


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## ClubMan (5 Sep 2006)

Greenhorn said:


> Indeed it can be wrong and often is! I re-iterate, if they're not sure, why don't they just say so and offer to check and come back with accurate information?


Because, in my experience, sometimes they think that they are right even when they are not. To be fair to _Revenue _and their staff they are not in the business of deliberately misleading people. But mistakes can and do happen. The bottom line is that the individual taxpayer must take whatever steps are necessary to ensure that their tax affairs are up to date and that they don't make decisions based on flawed or incomplete information.


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## Greenhorn (5 Sep 2006)

Perhaps I'm just particularly sore as the incorrect information given about selling to a son or daughter meant we had an extra CGT liability of €18,000, which was a real sickener!


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## ubiquitous (5 Sep 2006)

Tax issues such as CGT on property transactions which by their nature involve large sums both in terms of the transaction value and the amount of potential liability involved should ALWAYS be addressed with the aid of proper professional advice.


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## liteweight (5 Sep 2006)

If a bank, for example, gave out wrong information which cost us money, we have recourse to the law. I don't think it's good enough really to say that Revenue are sometimes wrong . Where are we supposed to get information that is not flawed or incomplete, if not the Revenue Commissioners? Tax Advisors are expensive and not worth it IMO for small queries.

Greenhorn has had to pay an additional 18K because of wrong information. Clubman admits that staff at Rev. are sometimes wrong and this has been my own experience. Perhaps Revenue should be training staff in the relevant, up to date information. I don't envy them their job in there, it has to be said, particularly lately with PAYE service on line etc.


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## ClubMan (5 Sep 2006)

liteweight said:


> If a bank, for example, gave out wrong information which cost us money, we have recourse to the law. I don't think it's good enough really to say that Revenue are sometimes wrong .


I suspect that if you check the relevant legislation (e.g. _Tax Consolidation Acts_) then you will find that the law is on the side of _Revenue _with regard to disclaiming responsibility for mistakes that may arise from the dissemination of erroneous information. If you want to change this then start lobbying for a review of the legislation.


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## liteweight (5 Sep 2006)

ClubMan said:


> I suspect that if you check the relevant legislation (e.g. _Tax Consolidation Acts_) then you will find that the law is on the side of _Revenue _with regard to disclaiming responsibility for mistakes that may arise from the dissemination of erroneous information. If you want to change this then start lobbying for a review of the legislation.



The point is that given the above the onus should be on Revenue to ensure that their staff are fully trained.


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## Greenhorn (5 Sep 2006)

Amen to that!


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## ClubMan (5 Sep 2006)

Of course.


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## Satanta (5 Sep 2006)

liteweight said:


> The point is that given the above the onus *should be* on Revenue to ensure that their staff are fully trained.


"Should" being the important point here, at the moment it's not! As you say, if you can't depend on the advice given by revenue who can you depend on? What happens if the professional advice you recieve is also wrong? etc etc.

Currently, and it is a very scary statement, the advice given by AAM seems to be of a higher standard than that offered by revenue! (at least it offers proof of statements [backup of the relevant revenue guides etc.] and the legal justification of views [not in all cases admitedly, but where large sums are involved I'd rather have the relevant "rules" in hand and printed off than simply quoting what a revenue employee told me (if you are given "advice" by someone in revenue do ask them to send you the relevant documents that proves the point in question!)]).


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## ClubMan (5 Sep 2006)

Satanta said:


> "Should" being the important point here, at the moment it's not! As you say, if you can't depend on the advice given by revenue who can you depend on? What happens if the professional advice you recieve is also wrong? etc etc.


_Revenue _dispense information not advice. If you go to a suitably qualified and regulated tax advisor then you would presumably have some come back if they don't advise you properly.


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## Satanta (5 Sep 2006)

ClubMan said:


> _Revenue _dispense information not advice.


Revenue are responsible for producing the information and enforcing compliance. On many phone calls to them I've often failed to be given the correct information from staff on the phone.... I have however been given lots of incorrect information on what steps to take that I would consider, seeing as it was no way related to the revenue documents, to be the personal "advice" of the person on the other end. 
Had I not found the documents and looked through them for myself I would have assumed the details given to me by the staff was the "information" and not just that member of staffs opinion. 

Again, not intentional, but had it been followed it would have left my tax affairs out by a fairly large chunk more than once (both over and under payments).


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## ClubMan (5 Sep 2006)

Be that as it may as far as I know the law is on _Revenue's _side in terms of disclaiming any liability for stuff that might arise from their dissemination of inaccurate or incomplete tax information.


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## Satanta (5 Sep 2006)

I believe you're 100% correct, which is probably the biggest problem with the system as it stands. Either staff shouldn't offer any opinion or advice unless backed up with the proof and details (information) or else there should be a level of accountability to what they say, at least where it's possible that people could interpret the advice as information.

However, it's a hugely different debate to anything related to the OPs point so not really one worth thinking too much about (and one I'm sure could possibly rumble on with more horror stories of advice/information gone wrong).


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## serotoninsid (6 Sep 2006)

liteweight said:


> Perhaps your daughter should issue receipts in order to avoid the situation the OP is in!



In the scenario I presented, I can't see how any harm can come to the landlord.  No receipts means that whilst the landlord has no proof that he definitely didnt receive more than what he declared, the opposite also cannot be proven - given that the tenant in question paid in cash.

unless someone can tell me different?


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## liteweight (6 Sep 2006)

serotoninsid said:


> In the scenario I presented, I can't see how any harm can come to the landlord.  No receipts means that whilst the landlord has no proof that he definitely didnt receive more than what he declared, the opposite also cannot be proven - given that the tenant in question paid in cash.
> 
> unless someone can tell me different?



Agreed. I just thought that if she issued receipts and kept a copy, she could avoid the situation every arising.


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## dam099 (6 Sep 2006)

serotoninsid said:


> In the scenario I presented, I can't see how any harm can come to the landlord. No receipts means that whilst the landlord has no proof that he definitely didnt receive more than what he declared, the opposite also cannot be proven - given that the tenant in question paid in cash.
> 
> unless someone can tell me different?


 
If it came to a revenue audit (or a query like you outlined in the original post) having receipts might clear it up quicker and have the Revenue go off and focus on the tenants tax affairs for overclaiming. Right now its one persons word against another. Revenue may not know who to believe, receipts would be objective evidence.

One thing that puzzles me a little, are there lots of short tenancies? I don't see the incentive for most tenants to overclaim as there is quite a difference in the maximum relief available to most people. Assuming most rent a room tenants are under 55 and single and not married over 55 couples the maximum relief they can claim is on E1,650 which I would have thought is is less than a years rent for rooms in many areas (and vs a threshold of E7,620 for rent a room)


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## deem (6 Sep 2006)

Is the onus not on the tennant claiming the rent relief to prove that they paid what they are claiming.


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