# Please advise how to make an agreement with Revenue?



## Kerrigan (14 Mar 2015)

A close friend of my partners recently tried to take his own life over a debt he has with the tax man.  The debt is in the region of 18k.  My partner and I are looking to help him out as best we can.  He's a proud individual and speaking about his finances is not something he takes lightly.   

He has two property's (main residence and investment property) both properties are in negative equity but are are both on schedule.  His earnings are covering his mortgage but he is incapable of currently clearing off in full his Revenue debt even though he is regularly making token repayments.

The revenue have requested a down payment of approximately 25% before they enter into an agreement with him - he doesn't have the 25% nor can he adhere to the repayment schedule they will put in place for him.      

Questions are -

Will there be any imprecations for me if I were to clear or part clear off his liability?
What happens (in his case) if he cannot muster up the 25% down payment?

Happy to have any feedback please.


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## Joe_90 (14 Mar 2015)

It's very kind of you to try to help.

The Revenue offer taxpayers an instalment arrangement to pay off arrears of tax.

Usually the Revenue will look for 25% upfront plus a direct debit monthly over a period of time.  The future current tax affairs have to be filed and paid on time.

The Revenue may or may not waive the 25% upfront.

It's hard to know what they will do if he does not have the 25%.  Is the business sustainable?

If you lend him the money there is no issue in the short term.  If the debt is not repaid then there could be an exposure to CAT but given the low level of loan it's not an issue.

Does he need to consider insolvency or PIA to deal with all the issues.


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## Kerrigan (14 Mar 2015)

Thanks Joe.

He's a sole trader so he is personally liable.

So far Revenue have refused to waive the 25%.  The business is just about breaking even.  His mortgage and living expenses are being met but Revenue are not getting enough slice of the action even though he is very prudent etc. there just isn't enough money to repay them what they want.

For example
a. if we were to pay 25% down payment and he could simply paid what he could afford would this be acceptable?  I understand that this debt could be outstanding for years if this were the case.

b. if he simply insisted he could not afford to pay the debt up front or the 25% but could give them a regular token repayment would the outcome be favorable?

c. is there any possibility the debt would be written off or written down?

d.  is he best closing the business down?

Thank you for your time on this matter.


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## Newbie-employee (15 Mar 2015)

What does his accountant say?  Are you willing to lose the money you pay on his behalf?  Closing down the trade will not get rid of the debt and make it impossible to repay the Revenue - he would also be entitled to very little social welfare.


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## Jimbobp (16 Mar 2015)

Well done OP in helping this person out. Are the revenue aware of the situation with this mans mental health? It seems unbelievably insensitive that they cannot be more accommodating to you and to him, (both of who are trying to solve the issue in very difficult circumstances). I think if they don't agree to waive the 25% (and agree to make the full amount over DD) then they should be exposed in the media for the heartless short sighted organisation that they have obviously become.


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## Kerrigan (21 Mar 2015)

Thanks very much for responses.  Revenue are unaware of health issues but they would be aware that this person has no money to offer them a lump sum nor the 25% down payment.  However he has offered them any surplus money he has each week and the prospect of trading out of the liability.  It seems they will not commit to anything without sight of the 25% yet will not give any hint of what they will accept each month after the 25% is handed over.  Though I do remember he did mention a figure of €400 per month which is not doable for him.  Either way he has an excellent history with Revenue but the introduction since January 2014 of repayment/return of any outstanding/unpaid purchase invoices the vat must be returned hence the difficulty he is currently in.

His accountants advise was weird; along the lines of try and deal with Revenue yourself as best you can because they are less harsh if you approach them alone.


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## fearbeag (21 Mar 2015)

Hi Kerrigan,

I admire your support for your partners friend. 

Dealing with the Revenue can be extremely stressful and a protracted process, so must be a great burden on them. Ideally it would be best if somebody would act as an intermediary in dealing with the Revenue given their current health. The stress on this person is not going to help them resolve the current financial difficulties and must be having a negative impact on their business.

I suggest that this person gets their situation reviewed by MAB's or gets some other independent financial advice. On the face of it, this person isn't able to maintain two mortgages and repay a debt to the Revenue at the same time. Are their other options to consider?, could they go on interest-only on one or both mortgages so that they can repay more to the Revenue. Another thing to consider is that Revenue charge in the region of 8%  interest, which is significantly greater than an average mortgage. 

In relation to the Revenue debt, how does the debt arise? , is it due to this person not repaying VAT to the Revenue ?, if I understand your last post correctly it is partly due to this person not being paid and hence they are not in a position to repay the VAT to the Revenue. If that is the case the root cause of the problem is due to other people not paying their way. If that is the case I would expect there are grounds to appeal this.
It is important to understand how the debt arises before negotiating with the Revenue. If its clear cut and the money is owed to the revenue, then it would be best to work out the best repayment schedule possible and propose this to the Revenue.  
If its not so clear cut, then they should have more leeway.


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## Gordon Gekko (22 Mar 2015)

But if VAT arises on an invoice and ultimately that person doesn't pay, the VAT is "cancelled"...


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## Kerrigan (22 Mar 2015)

Hi, sorry rereading my last post I wasn't very clear.  He made purchases for his business from the same supplier.  The supplier issued invoices and he placed these invoices against his sales which left him with a vat refund.  The revenue issued this refund to him.  The terms and conditions of repayment were 6 months.  In the interim revenue introduced new rules; that any purchase invoices that were claimed for their vat element and were subsequently not paid  within six months must be repaid bank to revenue.  As he didn't pay his supplier in time he returned all the goods in tact and they issued him with a credit note.  Revenue are insisting they must be repaid.  Before I make inroads on the bill I'm looking to clarify that the above is correct.  Thanks very much for all the replies.


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## Kerrigan (29 Apr 2015)

Hi guys,

Revenue refused to waive the 25% and insisted on large repayments each month.  They have now issued an endorsement and he has been informed that the sheriff will obtain judgement against him or have his business wound up or seek to have any payments he is owed by customers sent directly to Revenue.  His offer of repayment with our hep each month has been turned down.  He has prevented us clearing the debt off in full as he wants to contribute towards same.  

Its a sad state of affairs and very disappointing that Revenue could not work with us as we would have made clear that they would have received payment within their time frame.


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## thedaddyman (29 Apr 2015)

Is there any merit in speaking to a local TD to see if they can exist any pressure on revenue?. I hate to say it but I think the only way to get them to back off is to inform them of the suicide attempt. It might help if the TD was to write to someone senior in revenue outlining the personal issues here. In effect, it may be time to try and use some emotional blackmail on revenue to put something more realistic in place


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## Kerrigan (29 Apr 2015)

Thanks the daddyman.  Good idea re local TD.  Revenue are adamant on bringing this to a head and the official we have been dealing with refuses point blank to accept his proposals.  They even brought it to the attention of a senior official and they simply wont change their mind either.  It makes absolutely no commercial sense whatsoever.  They have seen his bank accounts and are fully aware there is no surplus funds.  I am fearful of the sheriff outcome and the pressure that will be applied when they come a - knocking.


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## mf1 (29 Apr 2015)

"I am fearful of the sheriff outcome and the pressure that will be applied when they come a - knocking."

It is not a lot of money - certainly, not enough for the man to be worrying himself sick. 

My advice to people in these situations is to clear the debt - by whatever means.  I take the view that Revenue believe that he can clear the debt - by borrowing from friends. Which he can. 

I have similar cases where Revenue have obtained judgements with the over hanging threat of publication which would be very damaging for the people involved. The clients say that they cannot raise/borrow the amount of the debts. I believe that they can and that the inability to pay Revenue is more because it is , in their minds, "unfair", rather than anything else.  

Borrowing from friends is a great deal less stressful than worrying about the sheriff.  

mf


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## Kerrigan (30 Apr 2015)

I hear what you're saying MF but not every single debtor has access to a friend or relative with reserves.  We don't all have the IMF at our disposal!!! From your experience, what is the worst possible outcome here?


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## RichInSpirit (30 Apr 2015)

Revenue are probably looking to bring finality to your friend's affair, and maybe they are right but don't appear to be.

If your friend isn't able to cover the Revenue bills from the sole trading then by continuing trading as a sole trader could be considered reckless trading. 
Your friend probably loves what he does for a living but if it isn't covering all the bills he needs to stand back and look at things dispassionately.
I switched back from being a sole trader a couple of years ago to being a Paye worker. I pay heaps of tax now but I never see it so I don't worry about it. 
Revenue are still pursuing me for a lesser amount of tax than your friend and currently I'm dealing with solicitors on revenue's behalf who are much easier to deal with than revenue themselves. 
In the good times of the economy I often borrowed the money at the year end for the tax man, but I doubt the financial institutions would lend money these days for a revenue debt. 

If the Revenue do pursue the judgement mortgage against your friend would it be the worst thing to happen? It would just mean that your friend now has 3 mortgages instead of 2 and it might be possible to spread repayments over a much longer period of time. 
But your friend should still look at the sustainability of his current business and financial affairs.


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## Jim Stafford (30 Apr 2015)

TD's love writing letters on behalf of constituents to anyone  as they are in the business of getting votes etc. However, there is no point in asking a TD to write a letter to the Revenue.  I have seen Government Ministers write letters to the Revenue to no avail: which is the way it should be.  The Revenue are totally independent.

I suggest that your friend just sends the Revenue a series of post-dated cheques for what he can pay.   If the Revenue insist on sending the Sheriff around, the Sheriff will accept instalments.  If the Revenue instruct solicitors, send them a series of post-dated cheques.

Instalment arrangements with the Revenue are expensive as their level of interest is quite high, and it is non deductible for tax purposes.

Jim Stafford


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## Clonback (30 Apr 2015)

Jim
An excellent pragmatic approach.However a letter from the right politician will do no harm.


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## Kerrigan (1 May 2015)

Appreciate all the excellent responses this thread as received.  

It's a relief to hear the sheriff will except installments as we were under the illusion it would be a nightmare dealing with their office.  Some wise guy had informed our friend that basically anything that was behind his garden wall was up for repossession; including that of his sons work tools and vehicle.  The son currently resides in Australia.

I have some further questions please:

Will the sheriff insist the debt be paid within two years as the revenue have insisted it must?
On a debt of 18k what do you realistically believe would be accepted each month?  Take into account that lump sum repayments will also be made throughout the duration.
Our latest meeting with revenue summed it up by letting us know his file was being forwarded to the sheriff for enforcement; however they could not tell us which sheriffs office was going to handle the case.  Why not?  We were simply told the sheriff would call us when he/she is good and ready.  
I will continue to still make repayments towards his debt whilst the liability hangs in the balance.
Will the sheriff write to hi first or just descend on his home?

Much appreciated.


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## Jim Stafford (1 May 2015)

I set out below the relevant sections from the Revenue guidelines to the sheriffs:

_

 A Warrant is valid for 12 months. However, if the Sheriff fails to collect any of the


liability within 6 months, the certificate must be returned to Revenue.


 Managers should check for Sheriff Seizure Clearance requests on a daily basis.


Seizure Clearance, issued on the request of Sheriff, is valid for only 2 working days


from the date it is received by the Sheriff (*See Paragraph 8)*

 The taxpayer must deal directly with the sheriff in relation to liabilities specified on


a Warrant.


 The Sheriff has the authority to negotiate a payment arrangement, not exceeding 2


years, with the taxpayer.


 Goods considered ‘available for seizure’ under Sheriff law must be the sole


unencumbered property of the taxpayer and must be saleable_

You will note that the maximum term the sheriff can negotiate is 2 years. If the sheriff is unsuccessful then the matter is passed to solicitors.  There should be no great mystery on who the sheriff will be: there are 16 Revenue sheriffs and they each have a specific geographic area. The sheriff will usually establish contact by letter first.

Jim Stafford


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## Kerrigan (1 May 2015)

Fair play Jim, thanks.

€500.00 per month, over two years, had been offered as well as €3000 lump in three months time and another 3k lump sum in January 2016 but they have disappointingly turned it down.  Time will tell hopefully the sheriff will be a much easier to do business with.

Is this a bad offer from our end?


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## Jon Snow (1 May 2015)

It's important to realise that dealing with the sheriffs will result in additional costs, which are borne by the taxpayer.

There's also no guarantee that the sheriff is the enforcement option they decide to take - they may do an attachment order for his bank account(s) and/or his debtors, which could effectively shut a business down overnight.

In order to get an instalment arrangement in place he needs to beg steal or borrow about 4k now upfront, and if he can offer the balance over 24-36months and show that it is a realistic proposal based on his income/cash flow projections, this should be acceptable.

I would suggest in the current climate (half the country's press all trying to find the next exposé of gombeen politics and light touch regulation) getting a TD to try to exert undue influence is not likely to give a positive outcome.


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## Newbie-employee (3 May 2015)

A letter from your local politician will not do any harm (it will be ignored), except that the politician and his office will know your business and will think you think you now owe them a favour!  My local politician routinely asks questions in the Dail regarding constituent's taxation affairs and while reports of these questions are usually redacted, the details are likely found in the official records/transcripts.

(I would think that Revenue are likely to go harder to avoid even the appearance of bias where they know politicians have gotten involved ... but its your call)


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## Kerrigan (4 May 2015)

Mmmm contacting a politician seemed like a good idea but after some reflection - not so good; especially considering his own accountant advised him to solely deal with revenue without the assistance of a financial adviser

I can confirm 4k was paid over the weekend and I am sitting here sifting through accounts from 2010 to date.  I note numerous purchase invoices for 2010 were not offset.  I presume it is too late to offset them against the liability now??  I take it any purchase invoices exceeding four years is not allowed as an offset - I guess it would not be possible to offset them against liability in 2014??


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## Kerrigan (5 May 2015)

I am just in receipt of a call informing me that our proposal has been turned down.  He has also received word from the sheriff who has also turned down his offer.  All very disappointing indeed.  

Thank you so much for all the help on this thread.


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## Kerrigan (30 Jun 2015)

Gordon Gekko said:


> But if VAT arises on an invoice and ultimately that person doesn't pay, the VAT is "cancelled"...



Interesting, we are now aware that 40% of the liability he owes is based on monies he *did not* receive.  He says he felt unnerved by the revenue official to agree his accounting preference was based on "sales based accounting" rather than "cash based accounting".  His turnover was less than 100k per year so it was most certainly not in his interest to be basing his accounting package on a sales accounting system.

This obviously needs to be rectified.  Can this be done via ROS?  Should credit notes be issued? Will this peeve the powers that be considering they agreed not to formally audit if he agreed to a) run a sales accounting system and b) make no further amendments; as he most certainly couldn't deal with a second visit from the Revenue.

His business is now closed.


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## fearbeag (11 Jul 2015)

Kerrigan said:


> Interesting, we are now aware that 40% of the liability he owes is based on monies he *did not* receive.  He says he felt unnerved by the revenue official to agree his accounting preference was based on "sales based accounting" rather than "cash based accounting".  His turnover was less than 100k per year so it was most certainly not in his interest to be basing his accounting package on a sales accounting system.
> 
> This obviously needs to be rectified.  Can this be done via ROS?  Should credit notes be issued? Will this peeve the powers that be considering they agreed not to formally audit if he agreed to a) run a sales accounting system and b) make no further amendments; as he most certainly couldn't deal with a second visit from the Revenue.
> 
> His business is now closed.




Kerrigan I agree that any errors should be rectified. However caution is needed, your friend needs to talk to an experienced accountant first so as to establish beyond doubt that the Revenue debt was overstated. They should look at all the accounts to check for other potential errors (which could be for or against them).  The accountant then should be able to advise on the best course to follow.  

Though if any follow-up action is taken, then your friend will have to deal with the Revenue again . Also an audit is a possibility, again more dealings with the revenue. Tread careful, especially given your friends state of mind.


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## Kerrigan (13 Jul 2015)

Thanks Fearbeg.

We are currently repaying approximately €600 per month on his behalf via the sheriff.  In fairness the sheriffs office have been accommodating but and there's always a but; we feel the time scale to repay is very tight.  We have an imposed deadline of 8 months from the time the warrant was issued (May 2015) to repay 80-90% of the liability?  Is this legally correct?  I thought 24 months was the time frame?


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