# tax office error



## Johnboy45 (22 May 2008)

if the tax office has made an error in the allocation of tax credits and this only comes to light after 2 years, am I really responsible to pay it back at stage?


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## ClubMan (22 May 2008)

Yes. It's up to you to keep your tax affairs in order and to check for such errors.


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## Graham_07 (22 May 2008)

If the amount is matieral, you could ask that it be taken by deduction from future tax credits over a couple of years. They will usually accede to this.


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## Johnboy45 (22 May 2008)

thanks Clubman and Graham.  its not my actual problem thank god, heard someone on the bus this morning talking about it and wondered what the situation was.  I did think it would be up to the individual to check credits/allowances but wasn't 100% sure.  I've just checked my credit certificate and it does state ...

_“Your employer will deduct tax using this information so please ensure that it is up to date and accurate.”_


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## ClubMan (22 May 2008)

And they can go back a lot further than 2 years if necessary. Even though taxpayers can only backdate claims by 4 years...


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## roker (23 May 2008)

They went back 15 years with me, it was added to my yearly return last year, but fortunately I still had all of the documentation and they did not, so they could not tell me what it was for.  By the way you can only claim  back up to 6  years from the tax office


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## ubiquitous (23 May 2008)

roker said:


> By the way you can only claim  back up to 6  years from the tax office



4 years.


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## roker (23 May 2008)

I tried to make a case with the local TD on this one, he told me 6 years, I may be wrong, but is does seem a very one sided system when the tax office can go back as far as they like


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## ClubMan (23 May 2008)

You and your _TD _are wrong. It's 4 years max. Makes for interesting reading in conjunction with this post!


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## Brianne (23 May 2008)

Yes, four years and I think it is inherently unfair that they can set a limit of four years and yet go back as long as they like. I think there is a case for challenge in some of their behaviour; however small tax payers have no chance. It will be interesting to see if the relatives of deceased who were not compliant and whose dead relatives estates were pursued for interest and penalties will take a case, now that Revenue have dropped this policy.
If my memory is correct , at one stage one could claim back ten years and then it became six years and now its four years, all that is fine if they operated the same policy.. I am a PAYE worker who is not evading tax, that is to my knowledge but from what I know it is mainly small tax payers who forget to claim or are careless in claiming medical expenses and many other allowances where the more affluent employ accountants to do the necessary and are unlikely to lose out.


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## ubiquitous (23 May 2008)

Brianne said:


> the more affluent employ accountants to do the necessary



A PAYE worker does not have to be particularly affluent to be able to afford the cost of an accountant to examine their annual P60, and entitlement to tax credits, allowances etc. Anyone earning the average industrial wage should be able to get such service for the equivalent of about 1-2 days pay, ie €250-€300 and possibly a good bit cheaper. 

Declaration of interest: I am an accountant.


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## Brianne (23 May 2008)

Agreed , that figure is not a whole lot .However, the truth is that many PAYE workers are not that well informed and don't either claim themselves or get an accountant to do it. I recently came across a neighbour who had experienced a lot of illness with children over the past few years, she honestly didn't know about claiming back for the costs.  She didn't believe me when I told her.Luckily , her GP was able to provide records and she got back a tidy sum, but only for the four years. I'm talking about someone who would have been at the GP with children an average of thirty times yearly........big money. Ok , ignorance of the law is, I suppose, no excuse, but when you see the way big business are able to come to settlements, and then you see someone with average wages,and in this case, one income and no nixers, I think the system is unfair.


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## ClubMan (23 May 2008)

In most cases I doubt that _PAYE _workers need an accountant anyway (unless they have other non _PAYE _income and/or non _PAYE _income tax liabilities). A relatively basic understanding of how the tax system works and a review of your statement of tax credits, payslips, _P60s _etc. is all that is needed. But many people can't be bothered and prefer to blame somebody else if/when discrepancies arise that lead to them owing back tax or treat unsolicited refunds of tax as some sort of magical _Revenue_ lottery win.


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## ubiquitous (24 May 2008)

Brianne said:


> when you see the way big business are able to come to settlements, ... I think the system is unfair.



With respect, I suspect that you have absolutely no knowledge of how the Revenue Audit system operates in relation to so-called tax settlements. Otherwise you would not write something as ill-informed as the above. A tax settlement does not denote a discount of any kind to the taxpayer, but in fact in the vast majority of cases involves the imposition of punitive penalties and 10%-12% per annum interest in addition to the core tax liability of the defaulter. The penalties alone can represent up to an extra 100% of the tax liability and are applied even in cases where Revenue fully accept and agree that the tax default arose due to a genuine error on the part of the taxpayer (big business, small business or individual) in the first instance.


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## ubiquitous (24 May 2008)

ClubMan said:


> In most cases I doubt that _PAYE _workers need an accountant anyway (unless they have other non _PAYE _income and/or non _PAYE _income tax liabilities). A relatively basic understanding of how the tax system works and a review of your statement of tax credits, payslips, _P60s _etc. is all that is needed. But many people can't be bothered and prefer to blame somebody else if/when discrepancies arise that lead to them owing back tax or treat unsolicited refunds of tax as some sort of magical _Revenue_ lottery win.



I agree fully. My point above was not a pitch advocating that PAYE taxpayers should start queueing outside their local accountants offices (God knows we have enough to be doing as it is) but was merely to counter the nonsense that only "the more affluent employ accountants to do the necessary" as if this was something underhand or criminal


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## Brianne (24 May 2008)

Ubiquitous, please quote me correctly. I didn't say that ONLY the affluent employ accountants. By inserting ONLY , you have completely changed the meaning. Furthermore, any inference re wrong doing or criiminality is your own. My meaning is that an accountant would know the tax law, and thus would not make the errors that someone ignorant of same would make.
I am not in the habit of inferring anything and if for some reason, you feel defensive , that is not of my making . I would expect an accountant to be more versed in tax law than a layperson, as I would expect a doctor to know more about medicine than a first aider.
Maybe I am ignorant of how Revenue Audits work but I can read and watch television. 
I read the papers, I see the penalties imposed , I'm sure you as the professional are quite correct in your analysis of same, for the majority ; however , please don't tell me that Revenue don't and haven't in the past made settlements.........but no way will they settle with the person who misses out on a few hundred euros, said person genuinely not having a basic knowledge of the tax law. Remember, many people aren't very literate and not well paid, I know many, and no, they don't employ accountants.
http://www.rte.ie/news/2006/0323/moriarty.html


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## roker (25 May 2008)

I am a PAYE worker but because I own a few share (not a lot) I have an accountant, this cost me a few hundred Euro a year which I cannot claim back tax on. ( if I was in business or self employed I could). As previously stated the Tax office went back 15 years with me, even though I had an accountant and had a refund the year in question.
It worries me now that as I am aproaching retirement with limited funds that I may receive another bill going back a few years.

I think we should all make a case to our TDs about the out of balance system of claiming back 4 years for us and the Tax office can go back as far as they like


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## z103 (25 May 2008)

> A relatively basic understanding of how the tax system works and a review of your statement of tax credits, payslips, _P60s _etc. is all that is needed. But many people can't be bothered and prefer to blame somebody else if/when discrepancies arise that lead to them owing back tax or treat unsolicited refunds of tax as some sort of magical _Revenue_ lottery win.


Many (most?) people do not know how the tax system works. Even fewer know how PRSI operates, judging by recent threads on AAM. They are at the mercy of the revenue.
Try explaining to someone with very basic literacy how cumulative PAYE tax works. It's not that they can't be bothered. Every penny counts, especially if they are on low income.
If a system doesn't work, the users shouldn't be blamed.


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## ubiquitous (26 May 2008)

> but no way will they settle with the person who misses out on a few hundred euros,


Have you any evidence to back up this assertion? I don't believe it is correct. For example, previous AAM threads have discussed the current Revenue practice to sometimes indicate on PAYE Balancing Statements that minor PAYE balances owed to by the taxpayer "will not be collected at this time".


ps I did most definitely not misquote you. You say "I didn't say that ONLY the affluent employ accountants." Correct. You said "the more affluent employ accountants" which is exactly the phrase that I quoted.


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## Graham_07 (26 May 2008)

ubiquitous said:


> Have you any evidence to back up this assertion? I don't believe it is correct. For example, previous AAM threads have discussed the current Revenue practice to sometimes indicate on PAYE Balancing Statements that minor PAYE balances owed to by the taxpayer "will not be collected at this time".


 
I have had several such cases where the underpayment on the clients' PAYE Balancing Statements was under €200 and Revenue did not collect. One must assume it's not worth their while to code in & collect such amounts.


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## ruthkell (26 May 2008)

Hi, sent P12 to revenue for 2005. They notified me a couple weeks ago that it was still outstanding?? Now they have sent me a cheque demand with my P21 for €2500.  They have made a mistake putting my husband down for recieving €9000 U/B that year instead of receiving €1230 U/B that year. I am sending in proof of this to-day and we should be liable for around €1200 tax for 2005 (His employer did'nt deduct enough tax that year either!! Lucky us).  
Do you think they will add interest on to this? 
Also, can I ask for them to reduce our tax credits over a couple years instead of asking for a cheque by return? 
If so, whats the max years we can reduce credits for?


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## Graham_07 (26 May 2008)

ruthkell said:


> Do you think they will add interest on to this?
> Also, can I ask for them to reduce our tax credits over a couple years instead of asking for a cheque by return?
> If so, whats the max years we can reduce credits for?


 
Interest is not normally applied to PAYE underpayments.
You could request the underpayment be split over a couple of tax years. for €1,200 the likely would be possibly 2 years.


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## roker (26 May 2008)

Why should an Engineer understand accounting and Tax? Does an accountant/Tax office understand Engineering?
My employer calculate it incorrect last year and the accountant calculated that I had overpaid a couple of thousand Euro resulting in a tax refund. If I had left this over 4 years the tax office would have gained this amount from me.


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## ClubMan (26 May 2008)

leghorn said:


> Many (most?) people do not know how the tax system works. Even fewer know how PRSI operates, judging by recent threads on AAM. They are at the mercy of the revenue.
> Try explaining to someone with very basic literacy how cumulative PAYE tax works. It's not that they can't be bothered. Every penny counts, especially if they are on low income.
> If a system doesn't work, the users shouldn't be blamed.


Understanding the whole system is not easy. But understanding the basics to the extent that you are able to double check your tax credits and allowances is. Many people (including many who I know who would be well able to) simply don't bother and mistakenly assume that their employer or _Revenue _are responsible to keeping things up to date.


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## Brianne (26 May 2008)

Ubiquitous,
My point above was not a pitch advocating that PAYE taxpayers should start queueing outside their local accountants offices (God knows we have enough to be doing as it is) but was merely to counter the nonsense that only "the more affluent employ accountants to do the necessary" as if this was something underhand or criminal 
I did not put  in the ONLY.......and by inserting it , it changes what I meant.


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## ubiquitous (26 May 2008)

I don't accept that. Imho, your use of the term "the *more* affluent" implied that you were referring to an exclusive group, hence my use of the prefix "only". I don't think it matters a whole pile now anyway.


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## Brianne (26 May 2008)

Roker, couldn't agree more, and what if you are not very literate or numerate and you lose out, then they only refund you for four years. If the same applies and you are auditied , they can go back for fifteen years. No matter what any accountant on this forum says, in my opinion this is unfair. We always talk about vested interests particularly those in property; if the tax system was very easily understood and help was freely available to those who needed it, would it be in the interest of the tax office or tax professionals.
This is an issue that affects all of us and the system should work for all of us , not just those clever enough or qualified enough to understand it.

Ubiquitous, you put in an ONLY which changed my meaning,,,,,,read your post again.


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## ubiquitous (26 May 2008)

Brianne said:


> No matter what any accountant on this forum says, in my opinion this is unfair.


No accountant on this forum, to my knowledge, has ever said that the four year rule is fair. My own view is that it is a disgrace and is probably unconstitutional. I can't wait for the day when someone appeals its validity to the High Court or Supreme Court.



Brianne said:


> We always talk about vested interests particularly those in property; if the tax system was very easily understood and help was freely available to those who needed it, would it be in the interest of the tax office or tax professionals.


In fairness this is patently untrue. The only "vested interests" who benefit from the four year rule are the Revenue (who have less admin work because of it) and the Exchequer (who profit financially from it by restricting taxpayers' rights to claim their entitlements). 

The four year rule is a disaster for all tax professionals who find themselves dealing with arrears cases from time to time.

The main bodies representing tax professionals and accountants (ITI, ICAI, ACCA, CPA) repeatedly call for simplification of our tax system and attack any legislation or Budget measures that increase its complexity. It isn't their fault if these appeals are ignored.



Brianne said:


> Ubiquitous, you put in an ONLY which changed my meaning,,,,,,read your post again.



I still contend that your comment "where the more affluent employ accountants to do the necessary and are unlikely to lose out" is a mile away from the reality.


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## Brianne (26 May 2008)

*Brewing terminology*

 The more popular etymology places the word's origins in the brewing industry.[_citation needed_] In 1876, British soft drink maker Hiram Codd designed and patented a bottle designed specifically for fizzy drinks. Though his Codd-neck bottle was a success in the fizzy drink industry, alcohol drinkers disparaged Codd's invention, often saying it was only good for "wallop" (a slang term for beer in the late-19th century).[_citation needed_] The term soon became "Codd's Wallop" and was eventually used for anything of low-quality or rubbish.



Ubiquitous, glad that we agree on the unfairness of the rule and glad to hear that the professional tax bodies are calling out for change in rules to simplify thing.
See above on definition of codswallop. I think there must be guidelines somewhere on this site re the use of such terms in describing anyone's contribution, even if one disagrees wholeheartedly with said post.


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## ubiquitous (26 May 2008)

Brianne said:


> Ubiquitous, glad that we agree on the unfairness of the rule and glad to hear that the professional tax bodies are calling out for change in rules to simplify thing.
> See above on definition of codswallop. I think there must be guidelines somewhere on this site re the use of such terms in describing anyone's contribution, even if one disagrees wholeheartedly with said post.



I apologise. I already had edited my post to eliminate that word, though unfortunately you beat me to it


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## Brianne (26 May 2008)

No problem, just healthy disagreement!!


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## Black Sheep (26 May 2008)

If you receive a P21 stating an underpayment of say €200 and it also states that this underpayment will not be collected they will not give you a tax clearance certificate


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