# In trouble with revenue, undeclared rental income



## poppie

So I'm one of those people that has my head in the sand when it comes to anything tax related. Your worse case scenario really! Every revenue letter that comes in post fills me with absolute dread! Yearly I see my accountant he tells me the amount,  I write the cheque after that I'm absolutely clueless! On Friday I received the worst kind of revenue letter and I'm in so deep I don't even know where to start to get out.

I wish I could make a long story short but I if I leave any details out I'll just be back on again...

Basically I bought my apartment start 2007. I lived in my apartment for almost three years until the Nov 2009 when I moved out and in with my partner now husband. During the three years I lived in my apartment I always rented out a room. In Oct /Nov 2009 I rented the apartment out to a couple. I didn't bohter to change my addresses, just paid for a mail divert...and off I went! 

I'm self employed as a sole trader. I have an "account" I put that in inverted commas as I now have serious doubts about him! My accountant was always aware of the situation both the room rental and then renting out the apartment. And every year the apartment came up for discussion he just said "sure we leave it another year...if anything comes up we'll just stick in a return"

The past few months a lot has come up! In Sept last year I went from self - employed to PAYE. My husband received a bill back dated to 2009 for single parents allowance and I received a bill from TRS back dated to the date of our marriage April 2011, for morgage interest relieve. I paid my bill and my husbands is currently taken out of his tax credits. 

At the time this happend I did ring my accountant and his advice was....to write in an appeal( ie. just a letter) l saying that I was just living with my husband from time to time and they might review 2009 and 2010 single parent allowance. So we wrote a letter and after waiting 4mths we got a letter back from revenue asking for a range documents of prove I wasn't living with my husband 2009-2010. We could provide some of the documents but not all of them so we decided to just leave things and payup. As the truth was I was living with him since Nov 2009.

And then Friday's letter arrived! Revenue ask for details of Rental Income years 2009- 2013 and to include tenant details, Claims for morgage intrest relief used as a deduction only allowable with PRTB registration.WHAT IS PRTB?? Never heard of it!

And to confrim my place of residence form 17/11/2009? Not sure why this date?

All to be returned within 14 days.

So I just want this sorted! Im 36 weeks pregnant and this the last thing I need!

So first question, do I ring revenue and engage (knowing my ignorance about tax affairs I'll land myself in it even deeper!!) or do I find a tax advisor and do all communication through them?

If it is the latter can you please, please, please recommend a tax advisor (dublin/meath) that deals with revenue on a regular basis and knows all about getting people out of trouble!

In regards with Tentants Details, do they need the names of the room rentals aswell ( both were friends of mine?) I don't think my accountant did anything about the room rentals either. 

Regarding my current tenants, its the same lady, her mother and her son  since 2009 but the man has changed.There is no up to date rental agreement, when the couple split I just never bothered to make her sign agreement with her details on it.

Futhermore in regards to prove of my address some of my addresses on bills still with my apartment and some with my huband. 

And my BIGGEST worry is that even though I want to pay up and get it sorted, will my husband now get into trouble for writing that stupid appeal letter saying I was only living with him from time to time. As you can imagine I want to kill my current account for his "poor" advice!!

So I need any help or advice you have and if anyone has ever been through something similar any encourgement that it can be sorted will be much appreciated. Thanking you in advance!!


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## Bronte

Register today with the PRTB is your first step, do it online now.  This is quite a tricky area and is untested as far as I know.  That is whether you registering now, 4 years late means you're ok for the last 4 tax years at least.  You abolutely need a realy good accountant.  

As far as I understand the rules you will be able to go back 4 years on the PRTB website but no further.


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## oldnick

One of the weirdest posts I've ever read...

This is going to look rude but really meant as advice.

You dont' seem able to deal with this and in addition to tyhe sensible advice of Bronte to immediately get a good accountant why, in your situation,  are YOU dealing with this  and not your husband?

Just tell your husband to deal with this with the accountant.

A couple of points which I'm sure your new accountant will tell you:-

1) Any owner of property can, if still residing in that property, let room/s and is not liable to tax if the rent is under 10k p.a. nor is obliged to register with PRTB (which I'm sure by now you've read all about). Your tax liability started from end 2009, not before.

2) It would appear that Revenue know or are confused ,perhaps from what you/your husband told them,  that from November 2009 you had let the apartment. That is why they are asking for confirmation/details.

Revenue want money ,not to get you "in trouble" . You'll just pay the tax that the rest of us have paid, the only "trouble" being a penalty and interest payments (and a few hundred to the accountant!)


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## putsch

oldnick said:


> why, in your situation,  are YOU dealing with this  and not your husband?
> 
> Just tell your husband to deal with this with the accountant.



This advice would have sounded a bit weird in the 20th century let alone the 21st century - not to mention on the anniversary of the death of Emily Wilding Davison! 

From reading the posts I am assuming that the let property that is giving rise to the revenue concerns in owned by the poster who in turn is then liable for any unpaid taxes. What you seem to really need is a good accountant - unfortunately I can't give you advice on this as after 10 years I'm looking for the same myself!!


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## Luternau

I would say the comment referred more to the OP not needing the stress of sorting this out whilst 36wks pregnant-as opposed to it being mans work!

I am not sure if you can backdate registrations with the PTRB to allow the interest (assuming there is interest) to qualify as a deductable expense. Hopefully you can-as it will reduce the tax bill considerably. 

You are going to have to give the Revenue all the information they require. They probably know more about you than you think at this stage and want to confirm the information. They will then either issue a tax assessment for the years in question or audit you (as you have made returns already). 

The income from renting a room is exempt from tax (so long as you were living there yourself) but is supposed to be declared on Form 11.

Please be assured that this is all easily rectified. Your accountant has given you very bad advice if he was as casual about this extra income as you say! Maybe it's time to change!

Best of luck!


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## Bronte

T McGibney said:


> Of course you can backdate PRTB registration and Revenue must accept this - there is nothing in legislation that allows them to refuse to do so.
> 
> .


 
My own accountant told me when this PRTB thing all started that while you can backdate your PRTB registration, as in the PRTB will allow this, but revenue might have an issue with it. For the life of me I cannot remember why now. Are you 100% sure this is correct. It was something to do with what you declared on your tax return I think, that if when you filed it and you weren't registered than you couldn't later backdate this - sorry this is a bit vague, I'll try and see if I have something in writing about it. It was all new at the time etc.

Poppie should change her accountant, he already apparently told her to lie and she's been caught out in this and also seems to have a very cavalier attitude to tax returns. In addition he never seemingly advised her to get PRTB registered, my own accountant always asked me to supply him with the PRTB regisistration numbers and for the last couple of years I have to send him the actual registrations. (I wonder is that not normal practice for all accountants? )


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## Bronte

I managed to find something on this issue about revenue/PRTB. The thinking might have changed on the advise my accountant gave me in the past. He based it on an ebrief from 2007 and whatever else accountants had access to. 

This issue was that it was not clear, at that time, from the PRTB registrations when the tenancy was registered. And you could register late. So it might not be clear that the tenancy was registered on time. For revenue purposes. And that therefore it's possible mortgage interest relief was not properly claimed. 

Does that make sense Tommy?

Where's Mandelbrot when you need him.   We could have a very interesting debate on this topic.


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## mandelbrot

I'm heee-ere! 

Wow, tempers are short this morning, I'll put it down to the hot weather 

As Tommy said, you can of course register a tenancy late and thereby qualify for interest relief - it is set out in Revenue's Tax & Duty Manual 04-08-10 ([broken link removed]) as follows (para. 4):

_"Late Registration:_
_While new tenancies should be registered within 1 month of their commencement, provision is also made in the Act for late registration at double the normal registration fee. An acknowledgement from the PRTB confirming registration in the case of a late registration will be accepted by Revenue as evidence that a chargeable person has complied with part 7 of the Act. However, a chargeable person claiming an interest deduction in his or her return must be in a position to indicate compliance with the Part 7 requirements at the time of making the return._

_Interest relief that has been denied for a particular chargeable period because a tenancy was not registered by the return filing date for that period can subsequently be restored if the landlord avails of the late registration facility, subject to the usual 4 year time limit on claims for repayment of tax."_


The issue for the OP here is that she has knowingly filed an incorrect return, and depending on the view taken by the Revenue officials dealing with her case this may result in a charge to interest & penalties arising.


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## T McGibney

Bronte said:


> my own accountant always asked me to supply him with the PRTB regisistration numbers and for the last couple of years I have to send him the actual registrations. (I wonder is that not normal practice for all accountants? )



That is a pointless exercise. It is impossible for your accountant to verify from registration copies or numbers whether or not you have complied with the Residential Tenancies Act by registering* all* tenancies. Hence logging reference numbers etc is superfluous on his part.





Bronte said:


> I managed to find something on this issue  about revenue/PRTB. The thinking might have changed on the advise my  accountant gave me in the past. He based it on an ebrief from 2007 and  whatever else accountants had access to.



As a professional, he should have read the legislation, which is  quite clear. Relying on eBriefs etc is all well and grand, but eBriefs  are not law.


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## poppie

Thanks thanks and thanks again!!!
 You have no idea how very grateful I am for all your advice! I’m on registering with PRTB as we speak. I just got all the tenants PPS no’s. 
I was up last night until 1.30 am searching the internet for accountants and recommendations for accountants experienced in dealing with Revenue on a regular basis. Unfortunately I it’s like looking for a needle in a haystack! I finally resorted to ringing a friend also a sole trader and a landlord. Her accountant gave her all the appropriate advice and his firm seem a bit bigger than my “one man band”....rubbish band at best! I’m still nervous as my previous accountant was also recommended by a friend. So again any recommendations would be soooo helpful. I trawled the recommendation posts on this website and there is a lot of people asking but very few actual recommendations. I vowed if I get this sorted I will definitely post who got me through it! 
Thanking you all again and please keep it coming any ideas suggestions or experience with something similar would be greatly appreciated.


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## mandelbrot

T McGibney said:


> That is a pointless exercise. It is impossible for your accountant to verify from registration copies or numbers whether or not you have complied with the Residential Tenancies Act by registering* all* tenancies. Hence logging reference numbers etc is superfluous on his part.


 
Better than nothing I suppose - out of curiosity how do you verify your clients' compliance?


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## mandelbrot

Poppie, I hate to be the bearer of further bad news but you should also brace yourself for owing more TRS back to Revenue than they've sought so far - you stated they have clawed back TRS from your date of marriage in 2011.

However, you will have to declare rental income from Nov 2009, and in doing so will be seeking to claim a deduction for the mortgage interest as an expense. You cannot claim TRS and a rental expense for the same interest (that would be getting double relief), so unless the Revenue person dealing with you has mush for brains they'll be asking for another 18 months' worth of TRS back from you.


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## Bronte

T McGibney said:


> That is a pointless exercise. It is impossible for your accountant to verify from registration copies or numbers whether or not you have complied with the Residential Tenancies Act by registering* all* tenancies. Hence logging reference numbers etc is superfluous on his part.
> 
> As a professional, he should have read the legislation, which is quite clear. Relying on eBriefs etc is all well and grand, but eBriefs are not law.


 
Goodness Tommy you're having a bad hair day today. First Luternau and now me. 

Obviously my excellent accountant, who I couldn't praise enough is not checking if the numbers are real. What's he's doing is making sure by actually requesting the PRTB confirmations that us negligent landlords don't get into a lot of bother. He's keeping us on our toes. And I match the confirmations per property and per unit. I do up an excel of everything. That reminds me now, maybe I should have sent him off the NPPR confirmation as well, that's a lot easier as it's only one document unless all the paper and email confirmations I have from PRTB over the years.

And being excellent of course he doesn't rely on just ebriefs, he goes to conferences and trainings etc. 

Poppie, if your looking for an accountant the poster T McGibney is one, though I'm not sure he's in the busines of trying to deal with your fine mess. You should expect to pay a good price for this first year, after this it will be plain sailing.  

Don't assume that a bigger accountancy practise is better, my experience of professionals of any field is that one man bands are excellent.  

Good to know someone is actually listening to the advise on here and has already begun to sort out the PRTB.

That reminds me Poppie, make sure you register for the NPPR and the househhold charge today too. The NPPR is going to cost you I think, look away now if you're going to be upset. 4K. Household charge is not so bad at about 130 or maybe 200 Euro. The fines built into the NPPR means that you should pay immediately.


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## T McGibney

mandelbrot said:


> Better than nothing I suppose - out of curiosity how do you verify your clients' compliance?



There is no point in us even attempting to verify this. We caution our clients  accordingly, in writing, when they receive their annual tax return. It is their responsibility to comply. If they have a query or difficulty they can call us.


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## T McGibney

Bronte said:


> Goodness Tommy you're having a bad hair day today.  First Luternau and now me.
> 
> Obviously my excellent accountant, who I couldn't praise enough is not checking if the numbers are real.  What's he's doing is making sure by actually requesting the PRTB confirmations that us negligent landlords don't get into a lot of bother.  He's keeping us on our toes.



Sorry, my criticism isn't personal and apologies in advance if it has appeared as such.

This has nothing to do with real or fake numbers. It is to do with the issue that having a PRTB registration number is not in itself de-facto evidence of compliance with the Residential Tenancies Act. 

An example of a breach (which I'm told is common) would be where a new tenancy is not notified to the PRTB and the previous tenancy registration is carried forward. The accountant has no way to verify whether or not this has happened. 

I personally believe that routinely collecting a landlord client's PRTB confirmations might well communicate a false sense of comfort to them if they have inadvertently or otherwise broken the terms of the Act, even if they can produce continuous registration confirmations.


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## Bronte

T McGibney said:


> Examples would be where a new tenancy is not notified to the PRTB and the previous tenancy registration is carried forward. The accountant has no way to verify whether or not this has happened.


 
What happens for me now, and I have a few property units, is that any new registrations I have to give a copy to the accountant. The procedure has evolved as we go along. It means that every year I double check that everybody is registered etc, so that I cannot get it wrong by forgetting. 

Where the tenancy is carried forward I duly document that on my excel etc.

What happened in the cases where there was a 'breach'?  Did revenue accept a backdating?


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## mandelbrot

T McGibney said:


> There is no point in us even attempting to verify this. We caution our clients accordingly, in writing, when they receive their annual tax return. It is their responsibility to comply. If they have a query or difficulty they can call us.


 
I queued that one up nicely for you, knew that's what you'd say, but I just wanted it explicitly said so that readers might realise that it's actually not the accountant's job to do all the compliance for their client.

However from a purely pragmatic and practical point of view - in the event of an audit, I would expect that most auditors will simply ask for the same information as Bronte's accountant above, and unless there is some kind of glaring gap there won't be a problem (compliance with the spirit of the law rather than necessarily the finest print of it, if you like).


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## T McGibney

Bronte said:


> What happened in the cases where there was a 'breach'?  Did revenue accept a backdating?



Yes. They actually have no power to refuse to do so.  But if an audit has already started, things could get very messy.


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## Bronte

mandelbrot said:


> _"Late Registration:_
> 
> 
> _A) However, a chargeable person claiming an interest deduction in his or her return must be in a position to indicate compliance with the Part 7 requirements at the time of making the return._
> 
> _B) Interest relief that has been denied for a particular chargeable period because a tenancy was not registered by the return filing date for that period can subsequently be restored if the landlord avails of the late registration facility, subject to the usual 4 year time limit on claims for repayment of tax."_
> 
> 
> C) The issue for the OP here is that she has knowingly filed an incorrect return, and depending on the view taken by the Revenue officials dealing with her case this may result in a charge to interest & penalties arising.


 
Thanks for coming to the rescue, I've put letters on the points, my accountant in the past was obviously rightly concerned about A, but it seems by the time of this latest briefing in 2010 that it was clarified by B, so that in fact you can do late registrations even 4 years late as is the case with Poppie. 

As for C, if poppie comes clean now and is very lucky they might be lenient on her. Hopefully for her she's running at a loss with the mortgage interest relief, even if she overclaimed the TRS.


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## Bronte

mandelbrot said:


> I queued that one up nicely for you, knew that's what you'd say, but I just wanted it explicitly said so that readers might realise that it's actually not the accountant's job to do all the compliance for their client.


 
Absolutely correct, it's the client's/landlords responsibility, and always is ultimately.  But Poppie, despite having an accountant has never even heard of the PRTB, that's something else.


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## poppie

Oh dear folks this is exactly why I am not ashamed to confess that I’m clueless about tax. I find it all very scary and just way beyond my knowledge! Not to mentioned the figure of 4k !!! And once again WHAT IS NPPR!?? I’ve never heard of this! Don’t know about ye but I certainly don’t have that kind of money lying around!
I started sifting through all my paper work this morning.  I had a closer look at TRS bill, and yes its backdated 2011 and 2012. Would it count in my favour if I ring TRS today ask them to back date a bill to 2009 and at least have that in place by the time I figure out what to send into revenue. In regards with property tax at least that is the one thing I did pay.
The letter from revenue is dated 29th of May so if I were to respond within the 14day period requested that only leaves me till next Wednesday the 12th of May to sort this out. That’s only 6 working days. And as of yet I have no accountant to help me with this. Are you sure I can’t twist your arm on this T McGibney??
I did actually ring my current accountant this morning to inform him of the revenue letter. I also explained very politely that I feel he has given bad advice in the past and that I feel I should seek the help of a tax consultant who deals with resolving revenue disputes and can he recommend anyone? His advice....sure just write a letter stating all your rental income, expenses, interest etc and they will do a tax assessment based on that. He said there are some guys in Dublin that could help but they will charge me a lot of money and will give me exactly the same advice as he did. He was kind enough to say not to worry Revenue just “tying up loose ends”. When questioning him about PRTB, he suddenly had a client at the door and he recommends I research it online and get back to him. So there you go!
Off course as my anxiety spirals out of control here the next thing I’m worried about is my maternity benefit, will I even get any!
I'm trying my best to be pro active about his. I have started doing up statements of rental income, expenses ect so that when I do meet with an accoutant at least I have figures (backed by paperwork) to work from. Once again I put in a desperate plea for a recommended good accountant, anyone??


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## T McGibney

poppie said:


> The letter from revenue is dated 29th of May so if I were to respond within the 14day period requested that only leaves me till next Wednesday the 12th of May to sort this out. That’s only 6 working days. And as of yet I have no accountant to help me with this. Are you sure I can’t twist your arm on this T McGibney??



If you'd like to talk today, email me at tax@mcgibney.com and I'll send you my mobile number.  Tried to PM you but it didn't work.


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## Bronte

Poppie, your accountant should be sued. Suggesting you just pop a letter off to revenue with your income and expenses and letting them figure it out, this is very odd behaviour. And referring you to the internet to find out about the PRTB. 

You don't need a tax consultant, just a competant accountant who knows how to do tax returns for landlord and knows how to deal professionally with revenue. A lot of people don't need an accountant but you certainly do. 

Firstly you've to stop stessing about the time limits. You need to take things easy and one step at a time. Because of your condition here's my best shot at the steps you have to take

*1. Backdate PRTB registration - priority no 1.* 
2. Forget about the NPPR for now, ditto the household charge
3. None of this will affect your maternity benefits, you're entitled to them and that's something not to worry about.
4. Calculate all rent back to Nov 2009, amounts per year
5. Cancel TRS with revenue
6. Write a letter to revenue, explain you are pregnant and request an extension of 2 months. This shouldn't be a problem.
7. Buy a binder, put all receipts into it, per year. Go back through your bank accounts and cheque book and see what you purchased for the property.
8. Calculate what value you are putting on the fixtures and fittings, to figure our your W&T allowance (wear and tear)
9. Read here on AAM the threads about landlords and rental income
10. Calculate how much interest you paid on the mortgage for each year since 2009.
11. If you do up a very basic income, mortgage interest, expenses and W&T for each year it will be easy to roughtly calculate if you're going to be in much hot water or not. Post the rough figures on her, per year. 
12. Calculate how much TRS you claimed since 2009 (see your mortgage bank statement)
13. What date in November was the property rented from. 

Just curious, how much did you pay your accountant to do your returns?

Google NPPR, it's the non principal private residence tax, the problem with it is that the cost of it is relatively low, it's big kick is the penalties for not paying on time. But for the current problem with revenue you don't have to deal with that right now.


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## Nige

write to the Revenue stating that you will be making a qualifying disclosure and you are therefore seeking an additional 60 days to respond to them.

Did the letter you received state that this is a Revenue audit? or mention audits?


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## T McGibney

Bronte said:


> You don't need a tax consultatant, just a competant accountant who knows how to do tax returns for landlord and knows how to deal professionally with revenue.  A lot of people don't need an accountant but you certainly do.
> 
> Firstly you've to stop stessing about the time limits.  You need to take things easy and one step at a time.  Because of your condition here's my best shot at the steps you have to take
> 
> 1. Backdate PRTB registration - priority no 1.
> 2. Forget about the NPPR for now
> 3. None of this will affect your maternity benefits, you're entitled to them and that's something not to worry about.
> 4. Calculate all rent back to Nov 2009
> 5. Cancel TRS with revenue
> 6. Write a letter to revenue, explain you are pregnant and request an extension of 2 months.  This shouldn't be a problem.
> 7. Buy a binder, put all receipts into it, per year.  Go back through your bank accounts and cheque book and see what you purchased for the property.



Excellent advice all round.


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## Bronte

T McGibney said:


> Excellent advice all round.


 
Well she is 36 weeks gone. I'm still working on it, did I forget anything? 

Tommy I'm afraid to mention stamp duty clawback. What's the rule for renting in 2009 if you purchased in 2007?

Somethings not making sense to me, if you have an accountant why would he allow you to 'pretend' you were in the rent a room scheme when you were married and clearly renting - I mean that's absolutely crazy.


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## T McGibney

Bronte said:


> Well she is 36 weeks gone. I'm still working on it, did I forget anything?  Tommy I'm afraid to mention stamp duty clawback. What's the rule for renting in 2009 if you purchased in 2007?



Yes, it _could_ be an issue. Clawback period cut from 5 to 2 years with effect from 5 December 2007, so there may be an exposure based on dates etc, however this shouldn't be the most immediate priority for the OP just now.


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## Bronte

Nige said:


> write to the Revenue stating that you will be making a qualifying disclosure and you are therefore seeking an additional 60 days to respond to them.


 
That's excellent advice Nige. Poppie you should write that in your letter requesting an extension. In basic terms what it means is that you are going to 'come clean' declare everything, and by stating this 'qualifying disclosure' clause it means that they you will avoid some penalties - though we don't know yet if you own much or any tax but it gives your further cover for dealing with them.


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## T McGibney

Bronte said:


> That's excellent advice Nige.  Poppie you should write that in your letter requesting an extension.  In basic terms what it means is that you are going to 'come clean' declare everything, and by stating this 'qualifying disclosure' clause it means that they you will avoid some penalties - though we don't know yet if you own much or any tax.



The OP should not inform Revenue of intention to make a qualifying disclosure without first understanding, via a professional advisor, exactly what a qualifying disclosure entails.


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## Bronte

T McGibney said:


> The OP should not inform Revenue of intention to make a qualifying disclosure without first understanding, via a professional advisor, exactly what a qualifying disclosure entails.


 
Ok you're the accountant.  So she should seek an extension due to her personal circumstance (pregnancy), so she has time to get professional advise, that's sounds about right.  

She might not be too bad if the mortgage interest is very large and if her expenses are high.  

I don't understand how people can still not know what the PRTB is and the NPPR etc.  Message on property tax, based on compliance rates seems to have sunk in though.


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## Sweep

Hi Poppie,
Just wondering if you got this sorted? I am now in a very similar situation myself. Some great advise on this thread. I hope you managed to resolve everything and it was not too stresfull for you.


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