# Calculating penalties and interest on undeclared rental income



## Bronte (4 Oct 2012)

If you had rental income from October 2008 of €1500 when you went abroad, and worked as a Paye worker prior to that.  In 2009 rental income of €3500 until you returned August 2009 and received unemployement benefit.  What is the tax, penalties and interest on that, or how is it calculated.

No PRTB so no mortgage interst relief. 

I presume they would be allowed PAYE allowance for 2009.

Wear and tear, how much would a normal 3 bed house for time period 2008 be to furnish.  12.5% of how much basically. I presume it would have to be apportioned in each year.  Ditto with any repairs.   

Revenue have found out because the tenant was a social welfare tenant. People renting knew this and thought they wouldn't get caught.   Revenue are going through the files it seems. 

How can one deal with revenue now, by coming clean presumably, any way to reduce the penalties and interest?


----------



## T McGibney (4 Oct 2012)

Much too complicated a scenario to give any sort of meaningful advice here. They need professional assistance immediately. Retrospective PRTB registration may or may not be feasible. They need to establish the extent of tax liability (if any) asap and engage with Revenue on that basis.


----------



## Bronte (4 Oct 2012)

How can you do retrospective PRTB if the tenants have left, and in any case it's over 4 years?


----------



## T McGibney (4 Oct 2012)

I don't know, but given the stakes involved, this person should investigate if it is feasible.


----------



## mandelbrot (4 Oct 2012)

If the net rental income is less than 3,174 as would appear likely even without an interest deduction (and if the tenants are in the wind then a PRTB registration seems a bit chancy), and assuming no other income which puts them into the "chargeable person" category, then it's possible the matter can be dealt with by way of submitting Forms 12 for the years in question.

AFAIK penalties & interest wouldn't be applied, as the tax would be due on a P21 rather than an actual income tax assessment. The shortfall might also be collected by reducing the tax credits for 2013/14, depending on the amount of tax (which will depend on the overall level of income of the taxpayer).

Agree with Tommy, it's probably a situation where a few hundred quid to a competent tax advisor wouldn't go astray (and some/all of that cost would also be a deductible expense of the rental income).


----------



## xeresod (5 Oct 2012)

Bronte said:


> I presume they would be allowed PAYE allowance for 2009.



Yes, but it will be restricted to the amount of the social welfare income so won't reduce the tax due on the rental income.




Bronte said:


> how much would a normal 3 bed house for time period 2008 be to furnish.  12.5% of how much basically



Be careful here, without actual receipts/proof this is getting into a murky area, especially when Revenue already has doubts about the person!

As with the other posters, getting a tax advisor would definitely be worth it and is a deductable expense.


----------



## T McGibney (5 Oct 2012)

xeresod said:


> Yes, but it will be restricted to the amount of the social welfare income so won't reduce the tax due on the rental income.



Won't they also have a personal credit that can be utilised against the rental income?


xeresod said:


> As with the other posters, getting a tax advisor would definitely be worth it and is a deductable expense.



+1


----------



## Bronte (8 Oct 2012)

mandelbrot said:


> If the net rental income is less than 3,174 as would appear likely even without an interest deduction


 
The actual rent is apparently 3200 for that year. They are now going into the revenue offices with their hands up to see what they say. They were also advised to get an accountant. We'll see what happens. I'll post on any progress.


----------



## Bronte (16 Oct 2012)

Update, revenue has told them to fill out a form 12 which they are sending out to them.


----------

